Corporate Restructuring of CDS
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Transcript of Corporate Restructuring of CDS
Corporate Restructuring of CDSCorporate Restructuring of CDS
Mark Weseluck – Executive Director, Customer Service and Product Development
ACSDA General Assembly – Panama City
February 22, 2008
Current shareholders
6 Banks TSX IDA
The Canadian Depository for Securities Limited
Securities clearing and depository services
CDS INC.
SEDAR SEDI NRDInformation
dissemination
Previous CDS Structure
Current shareholders
6 Banks TSX IDA
The Canadian Depository for Securities Limited
Holding company
CDS INC.
SEDAR SEDI NRD
CDS Innovations Inc.
Information dissemination
CDS Clearing and Depository Services Inc.
Securities clearing and depository services
New CDS Structure as of November 1, 2006
Corporate Restructuring
Why restructure?– Segregate regulated and unregulated services for
simplification of regulatory and financial reporting
– Mitigate risk spillover between different lines of business
– Provide the organization with the flexibility to establish new services within current or future subsidiaries
Corporate Restructuring Impacts
Corporate restructuring had various internal and external impacts: – Regulatory oversight
– Corporate governance
– Legal considerations
– Financial issues
– Staff considerations
Regulatory Oversight
Regulators advocated clearer separation of core and non-core services to reduce risk spillover
Proposed new structure required approval/non-disapproval from CDS’s three regulators
Formal oversight arrangements in place for regulation of core services
Revised governance structure required as part of restructuring
Corporate Governance
Legal Considerations
Most extensive role in implementing corporate restructuring:– Analysed possible legal structures
– Co-ordinated and effected regulatory, governance, legal and documentation issues
– Reviewed and assigned contracts to reflect new companies
– Re-applied for CDS as member in other depositories
Financial Issues
Cost allocation of shared corporate services among subsidiary companies (direct and indirect costs)
Distribution of surpluses
Cross charging of support between sister companies
Tax considerations
Staff Considerations
All staff employed by CDS Limited– Assigned to subsidiary companies as applicable
Corporate services provided to subsidiaries through service level agreements– Greater planning and co-ordination required for
use of shared services
Opportunities for developing/advancing staff
Lessons Learned
Start as early as possible
Have a dedicated team and manage as a project
Keep regulators informed throughout the process
Keep staff informed about the impact and progress of the project
Don’t underestimate the effort required to advise external parties and effect the legal changes