Canadian IROs call for lowering of mandatory disclosure threshold
The Canadian investor relations community has called for the mandatory disclosure threshold for investors to fall from 10 percent to 5 percent, finds new research from IR Magazine.
Around two fifths of Canadian IROs believe 5 percent is the correct level for disclosure, according to the study. A third back the current figure of 10 percent, while roughly one in 10 calls for a European-style 3 percent threshold.
The research, which surveyed the views of 825 IR professionals from around the world, finds that globally half of all respondents back 5 percent as the appropriate level for mandatory disclosure.
In Europe, where many countries operate tighter systems than in North America, the IR community says it is largely happy with the status quo. Fifty percent of European respondents say investors should notify companies about their holdings at 3 percent – the current system in the UK, Spain and Germany.
The findings come eight months after the Canadian Securities Administrators (CSA) decided against reducing its 10 percent mandatory disclosure threshold. CIRI, the Canadian IR association, had campaigned for the level to fall to 5 percent, which would bring it in line with the US market. Ex-CIRI CEO Tom Enright has said the current system ‘significantly trails the rest of the world and this is negatively affecting Canadian market efficiency’. But the CSA said the majority of respondents to a consultation had argued against the proposed cut.
As the job of IR professionals is to keep tabs on the shareholder base, you might assume their view is that lower is always better. In fact, many respondents support the system they currently operate under. For example, 54 percent of US respondents believe the current level of 5 percent is the right threshold for disclosure.
There is much more support for lowering thresholds than raising them, however. Looking at the US again, a third of respondents would like to see the threshold reduced to 3 percent, while just 9 percent support a rise to 10 percent.