The Investment Dealers Association of Canada is proposing amendments to its by-laws that would allow it to create a more independent board, by scrapping a requirement regarding a minimum number of industry directors.

Current IDA by-laws require that at least two thirds of the organization’s board must be comprised of industry directors and they give the board the authority to determine the number of members of the board. The bylaws also limit it to a maximum of eight public directors. And, they require that nine directors must be present in person at a board meeting in order to form a quorum.

The IDA notes that the two-thirds requirement needs to be removed so that the percentage of public directors on the board at any given time may be increased. And, because of the changes that are being made to the structure of the board, an amendment is required to reduce what constitutes a quorum from nine directors to seven. “By reducing the size of the board and removing the requirement which specifies a minimum percentage of industry directors, the composition of the board will likely shift to an increase in the percentage of public directors and in turn a more independent and transparent board of directors,” it explains.

“The objective of the amendments is to enhance the corporate governance structure by creating a structure that is manageable in size for effective governance and decision making and which reflects a higher standard of independence than currently exists,” it says. “Creating a more independent and transparent board of directors who is held responsible is necessary in today’s corporate landscape.”

The IDA notes that it considered requiring 50% public representation on its board. But it ultimately rejected the idea. “After careful consideration it was agreed that such a requirement may be appropriate for a ‘for-profit’ company, but was not appropriate for an association such as the IDA, which is subject to a significant number of substantive checks and balances, including regulatory oversight,” it reports. “It was agreed that public directors do not need to constitute half of the board to make their views effective.”