TORONTO, June 2, 2011 /CNW/ - In recent weeks, there has been a lot written and said about the Scotiabank investment in CI Financial (CI) and our request to vote on the renewal of CI's Shareholder Rights Plan. Given that the right to vote was before the Toronto Stock Exchange (TSX), and then the Ontario Securities Commission (OSC), Scotiabank largely refrained from commenting.  It is unfortunate that this was made a public issue despite our best efforts to have the matter decided early and privately.  In CI's latest action, it was in fact against CI's own rules as outlined in their proxy circular, for them to single out a confidential shareholder vote made by the Bank at the CI AGM by publicly disclosing it.

In this context, and now that the vote has been completed, the Bank would like to clarify a few points.

Scotiabank did one thing - we asked the TSX if their rules permitted Scotiabank to vote on the renewal of the Plan. We were gratified that the TSX supported the position that the Bank was entitled to a vote.  We were disappointed that the OSC overturned the TSX, but we respect the decision of the OSC although we continue to believe that the TSX position was correct.

We do not view seeking a ruling from the TSX, which the Plan specifically refers to, as a hostile act against CI. We have never stated, either privately or publicly, that we were entering a proxy contest and we have not privately or publicly solicited shareholder votes on this matter.  Letters from Scotiabank's Chairman of the Board have explained this to the board of CI on two occasions.

Contrary to published reports, we have not requested Scotiabank representation on the CI Board. We did make a request to the CI Board that they agree to two independent directors, who would be acceptable to both the CI Board and to shareholders.  These directors would have no affiliation with Scotiabank.  The addition of two highly qualified individuals would simply add to the skills of the existing CI Board, which would benefit all CI shareholders.  This suggestion was made by us in two letters to the CI Board.  The Bank continually explained that it was not trying to populate the CI Board with Bank nominees. The CI Board apparently decided yesterday to deny Scotiabank the ability to put an independent nominee forward, regardless of the calibre of the candidate. Such a decision would be shortsighted in terms of the value to the company and another effort to deny our rights as a shareholder, as well as being poor corporate governance.

Since we became a significant shareholder, we have continued to support CI, which in fact currently manages close to $1 billion in assets for us. Far from acting as a competitor, we have sought to enhance CI's earnings and shareholder value.

Our vote, now that it has been made public, was on the issue of an independent board and hence our vote to withhold on the two non-independent directors. Yesterday's actions by the CI Board of Directors and the references by its Chairman reinforce our views with regard to our fundamental rights. Accordingly, we believe it is appropriate for the CI Board to engage an independent expert to review its corporate governance policies to ensure alignment with best practices, including the adoption of a non-executive chair.