Board of Directors Mandate

Introduction & Purpose

CIRO is a national self-regulatory body that regulates mutual fund dealers and investment dealers and acts as the regulation services provider for certain marketplaces in Canada. It is recognized by the securities regulatory authorities of each of Ontario, Quebec, Alberta, British Columbia, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Northwest Territories, Nunavut and Yukon and its authority is subject to the terms and conditions of recognition orders (the “Recognition Orders”) of, and thereby the oversight of, these regulators as well as applicable securities laws.

The mandate of CIRO is to, among other things: (a) protect investors from unfair, improper, or fraudulent practices by members of CIRO; (b) foster fair and efficient capital markets and promoting market integrity; and (c) foster public confidence in capital markets.

CIRO’s Articles of Amalgamation, By-Laws, the mandate of the Board of Directors of CIRO (the “Board”) and the Recognition Orders issued pursuant to applicable securities legislation set out the mandate of CIRO, its regulatory framework, and inform the authority and responsibility of the Board.

The Board is responsible for overseeing the business and affairs of CIRO. It will act as necessary to promote the effective discharge of CIRO’s regulatory and public interest mandate and the attainment of its objectives. However, the Board has a function independent of management and is not responsible for the day-to-day affairs of CIRO, which it delegates to the President and Chief Executive Officer (“CEO”) and senior management of CIRO. The Board will discharge its supervisory and oversight responsibilities directly and through its committees, and it will adopt governance structures and processes that support high ethical standards and integrity throughout the organization.

Specific Responsibilities

The Board’s responsibilities include the following:

Appointment, Compensation and Oversight of Management

Appoint, and if necessary remove and replace, the CEO. The CEO will be selected through a “fit and proper” assessment process by the Board.
Appoint, and if necessary remove and replace, considering the recommendation of the CEO following a “fit and proper” assessment, other officers of CIRO in accordance with the By-Laws.
Review and approve the compensation approach and establish guidelines for setting senior management compensation, including incentive awards and benefit plans, having regard to the applicable criteria set out in the Recognition Orders.
Monitor and assess annually the performance of the CEO and other members of senior management against a set of mutually agreed upon objectives and approve compensation for the CEO and other members of senior management.
Review and approve the process for the appointment, development, evaluation and succession of the CEO and other members of senior management.
Oversee and approve the finance authorizations policy of CIRO, including expenditure limits delegated to management.

Strategic Planning & Risk Oversight

Oversee and ensure effective strategic planning and risk management processes for CIRO that identifies potential short, medium and long-term opportunities and risks for CIRO, having regard to the Recognition Orders, CIRO’s mandate and its regulatory and public interest responsibilities.
Review, provide input on, and approve on an annual basis the strategic and operational plans proposed by management, taking into account CIRO’s mandate, the opportunities available to CIRO, the potential risks facing CIRO, the Recognition Orders and CIRO’s regulatory and public interest responsibilities.
Monitor and oversee the effectiveness of management’s implementation of CIRO’s strategic and operating plans.

Governance

Review CIRO’s corporate governance model periodically to ensure that it appropriately reflects the evolution of the Canadian capital markets industry.
Review and, if appropriate, approve any required changes in CIRO’s By-laws and propose amendments to the Articles of Amalgamation to the members of CIRO and any other matters requiring member or regulatory approval.
Oversee structures and procedures to enable the Board to exercise judgment independently of management and, as applicable, non-independent directors.
Adopt processes for ensuring that independence of directors is assessed on an annual basis and that the independence requirements set out in the Recognition Orders are met.
Oversee the process for identifying and nominating directors to be elected to the Board, having regard to CIRO’s By-laws and the Board’s skills matrices.
Oversee a process to ensure appropriate succession-planning for the Board, including by having regard to term limits as set out in the By-Laws.
Adopt and review annually the code of conduct for Directors (the “Board Code”), monitor compliance with the Board Code and oversee or approve, as the case may be, any waivers of the Board Code and ensure that appropriate notices are provided in respect of such waivers.
Oversee the process for evaluating the overall performance of the Board as a whole, each Board committee (the “Committees”), the chair of the Board (the “Chair”), each chair of a committee of the Board (a “Committee Chair”) and each individual director, through an annual review and evaluation of the structure, size, composition, development, selection and process of the Board and its committees.
Review and consider reports of the Committees with respect to any proposed amendments to their respective mandates.
Oversee the process for monitoring and ensuring that CIRO is performing its regulatory and other functions in accordance with all applicable Recognition Orders, rules and approvals.
Review the integrity and effectiveness of CIRO’s internal controls and management information systems.

Financial Management and Reporting

Review and approve CIRO’s annual financial plan having regard to input from each securities regulatory authority that recognizes CIRO as a self-regulatory organization in accordance with the Recognition Orders.
Monitor financial results relative to established strategic and financial plans.
Receive and approve annual financial statements, receive and review quarterly financial statements and review and oversee CIRO’s compliance with applicable audit, accounting and financial reporting requirements.
Review CIRO’s fee model periodically to ensure that it is appropriate and continues to meet the requirements of all applicable Recognition Orders.
Monitor the sufficiency of CIRO’s financial resources for the proper performance of its regulatory and other responsibilities.
Annually review CIRO’s insurance coverage and approve any changes to the coverage and amounts of D&O insurance.

Culture

Support a corporate culture of integrity and responsible stewardship that upholds the highest standards of legal and ethical conduct and which helps to facilitate the conduct of the operations of CIRO in a manner that is consistent with and promotes the public interest.
Satisfy itself, to the extent feasible, as to the integrity of the CEO and other executive officers, and that such individuals promote a culture of integrity and responsible stewardship throughout CIRO, including with respect to CIRO’s public interest mandate.
Oversee the steps taken by CIRO to support and promote a diverse, inclusive, and equitable environment where all board members, staff and members feel respected and valued regardless of gender, age, race, ethnicity, national origin, sexual orientation or identity, disability, education, or otherwise.
Oversee the establishment, review, maintenance and enforcement of policies and procedures for identifying, managing and reviewing real, potential or perceived conflicts of interests and managing confidential information.

Public Interest

Oversee management’s system and approach for ensuring that the business and operations of CIRO are conducted in a manner that is consistent with and promotes the public interest.
Facilitate, promote and participate in training relating to CIRO’s public interest mandate.

Rule Making

Oversee the process for the making of, amendment to or repeal of rules, policies and other instruments for the objects of CIRO as a self-regulatory organization and a regulation services provider, including the review and, if appropriate, approval by the Board of any such new rule, policy or other instrument and any amendment to or repeal of any such existing rule, policy or other instrument, in each case having regard to CIRO’s By-Laws.

Individual Director Responsibilities

Directors must exercise their business judgement on an informed basis, in good faith, and with the belief that the actions taken will serve the best interests of CIRO. Directors are also expected to act in a manner consistent with CIRO’s self-regulatory mandate to act in the public interest.

Directors are expected to attend Board and Committee meetings, participate effectively in Board and Committee deliberations, observe strict confidentiality of all matters presented to the Board or their appropriate Committee, raise real, potential or perceived conflicts of interest issues for prompt resolution, and act in the best interests of CIRO, consistent with their fiduciary duty.

Directors are expected to participate in annual training on industry, governance, and investor protection issues, including training on their specific role and responsibilities, in interpreting CIRO’s public interest mandate and the management of conflicts of interest.

Directors are expected to comply with the Board Code, which has been adopted to reflect a commitment to the highest standards of ethical and business conduct. Each director should become familiar with and abide by the Board Code, as well as any interpretations and procedures issued thereunder. Any breach by a director of the Board Code will be taken into account in determining whether such director is considered to be fit and proper, including in determining whether the office of a director will be automatically vacated in accordance with the By-Laws.

Operation of the Board

The composition and selection of the Board is described in CIRO’s By-Laws.

The Board will meet at least four times a year, or more frequently as it deems necessary to carry out its responsibilities.

The Chair, with input from the CEO and the support of the Corporate Secretary, will establish an agenda for each Board meeting. Board materials will be distributed to the Board on a timely basis, in advance of the Board meeting.

The Chair will oversee Board meetings to ensure that such meetings are conducted in an orderly fashion.

An in camera session of all directors will be held at every board meeting to offer the opportunity for all Board members (including the CEO) to meet without other management, as well as for the Board to meet without the CEO. As well, an in camera session of all independent directors may be held in any other circumstances deemed appropriate by the Chair or on a motion passed by the Board. The Chair will report to the CEO and Corporate Secretary any actions taken during these in camera sessions.

The Board will appoint Committees to facilitate and assist in the execution of the Board’s responsibilities. CIRO’s standing Committees include the Governance Committee, the Finance, Audit and Risk Committee, the Appointments Committee and the Human Resources Committee.

In discharging its responsibilities, the Board and its Committees will have the authority to obtain, at CIRO’s expense, advice and assistance from internal resources and external advisors or professionals as it deems appropriate.

Communications by and among Board members with respect to the affairs of CIRO are expected to be conducted through, or with knowledge of, the Chair, Committee Chairs, Corporate Secretary or other designated officer, as appropriate, in order to ensure transparency, subject to circumstances where confidentiality or other legal constraints requires otherwise.

To the extent possible, the Chair and a majority of the Chairs of the Committees will attend the Annual General Meeting of CIRO to hear and discuss member concerns.

The Board will meet with the investor advisory panel at least annually.

From time to time, the Chair may meet with the CSA Chief Executives, upon request by either party.