The Mutual Fund Dealers Association of Canada’s annual general meeting on Dec. 4 ended in victory for members when a recent proposal to make changes to By-Law No. 1 was voted down.

One of the major concerns for members was the proposed change to By-Law No. 1 and the definition of “public director.” The proposed change would have permitted individuals who are currently ineligible to act as public directors to qualify for the positions. These included: current federal or provincial government employees; current members of the House of Commons or provincial legislatures; and those who provide services to the MFDA, a member’s protection fund or a member firm itself.

The proposed amendments would have also changed the terms of office and maximum tenure for all MFDA directors to four terms of two years each, from two terms of three years each. That would increase the total maximum years to eight from six. With some current directors already at their term limit, Mark Kent, president of Calgary-based Portfolio Strategies Corp. said the proposed amendment would be another way for the directors to re-appoint each other for additional terms, thereby entrenching themselves further, while blocking the entry of any new blood.

“I think the MFDA were shocked today that they lost their vote,” says Ken Parker, vice president of compliance and finance with Portfolio Strategies Corp just moments after the meeting was adjourned. “It seems as if they presumed they would have enough votes and expected to win and then didn’t know how to proceed with the results.”

In order for a proposal to be passed 2/3 of the votes must be majority votes. Yesterday resulted in 45 in favour and 37 opposed leaving the amendment defeated. The meeting also saw one of the largest turnouts the MFDA has ever seen as well as the first time a proposal has been turned down by members.

“It was great to see one of the largest turn outs in MFDA history and that so many members were present to submit their vote,” says Kent. “This was a huge victory for members today and I think it the MFDA are going to have to rethink on how they go about some of their business.”

With the proposed amendment voted down, current board members who have already reached their maximum term, but were nominated for the 2009 board, are now disqualified from the running. It has not been announced how the MFDA will proceed.

The MFDA were are not prepared to comment at this time.

IE