National IR association wants disclosure threshold for shareholders to fall from 10 percent to 5 percent
The Canadian Investor Relations Institute (CIRI) has called for the disclosure threshold for share ownership in Canada to be cut in half.
In a letter to the Canadian Securities Administrators (CSA), the national IR association asks for the level at which shareholders must reveal their holdings to fall to 5 percent from 10 percent.
CIRI also calls for shareholders to reveal any increases or decreases in share ownership of 1 percent or more once they have passed the 10 percent level.
As things stand Canada is out of step with disclosure regimes in other countries and could be negatively affecting its capital markets, argues CIRI.
Under the current system, shareholders must disclose their holdings once they pass 10 percent of a company’s outstanding shares. Further increases of 2 percent above the 10 percent level must also be revealed.
This regime appears lax when compared to other major equity markets. The US, France and Germany have set their disclosure thresholds at 5 percent, while the UK’s is even lower at 3 percent.
‘In Canada, the level of transparency of ownership disclosure significantly trails the rest of the world and this is negatively affecting Canadian market efficiency,’ comments Tom Enright, president and chief executive of CIRI, in a statement.
‘For a market to be truly transparent requires the appropriate level of transparency from all market participants.’
CIRI’s letter comes almost a year after a group of Canadian issuers sent a letter to the CSA calling for a similar cut in the early warning threshold from 10 percent to 5 percent.
