The Mutual Fund Dealers Association of Canada has issued its final report on plans to overhaul its corporate governance.

The report is contained in a bulletin (number 0011-P, March 24) to members.

When the MFDA was established in 1998, its by-laws mandated a 21-member board of directors comprised of three equal groups: representatives of The Investment Funds Institute of Canada, the Investment Dealers Association of Canada and the public. In February 2001, the MFDA obtained a series of recognition orders from various securities commissions recognizing the MFDA as a self-regulatory organization in Ontario, British Columbia, Alberta, Saskatchewan and Nova Scotia.

These orders required the MFDA to submit a plan to revise its corporate governance structure to the recognizing jurisdictions by February 2003 and to implement an approved plan by December 2003.

The orders included the regulators’ expectations for revisions to the MFDA’s corporate governance, including: the MFDA’s board should reflect a balance between the interests of the different members of the MFDA in order to ensure diversity of representation on the board; the board of directors and board committees should include a reasonable number and proportion of public directors, in order to recognize that protection of the public interest is one of the primary goals of the MFDA; and IFIC and the IDA should not have automatic rights to nominate and appoint individuals to serve as MFDA directors.

Over the past year, the MFDA corporate governance committee worked on developing recommendations for the MFDA corporate governance structure. The committee, chaired by Ron Daniels, Dean of the Faculty of Law at the University of Toronto, presented its Report to the MFDA Board of Directors in December, 2002 and the final report reflecting the MFDA Board’s comments to the MFDA executive committee in February 2003.

The MFDA Corporate Governance Report has been forwarded to the securities commissions in the jurisdictions that have recognized the MFDA as an SRO for their review and comment. It is also open to comment from MFDA members. Over the next months, the MFDA says will be discussing the report and the development of draft by-law amendments that would give effect to the new corporate governance structure with the securities commissions in the recognizing jurisdictions.