Federal financial regulators are seeking to bolster corporate governance by setting out requirements for firms to give them a heads up about pending changes to top executives, or the board.
The Office of the Superintendent of Financial Institutions (OSFI) issued a draft advisory Monday that outlines the process for firms to notify it about potential changes to the membership of their board or senior management.
In a letter to firms under its supervision, OSFI notes that, since the global financial crisis, it has stepped up efforts to improve corporate governance at those firms, in order to meet new international expectations. To that end, it’s now proposing to formalize the notification requirements.
The advisory says that, for large firms (including domestic systemically-important banks), OSFI may request an introductory meeting with a new executive or board appointee “to facilitate discussion” about their professional background, their prospective regulatory responsibilities, and the nature of OSFI’s interactions with their firm.
OSFI says that it believes these types of introductory meetings “are an important opportunity to promote mutual understanding and confidence among regulators, directors and senior officers, and to further strengthen overall corporate governance of major [firms].”
Under the advisory, firms would be required to give the regulator at least 30 days notice about the pending hiring of a new senior executive; and, they would have to notify OSFI about a new director nominee immediately. If OSFI has a specific problem with a pending appointment, or board nominee, it will inform the firm’s board “as appropriate”, it says.
Comments on the draft advisory are due by February 28.