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David Denison, CEO of the Canada Pension Plan Investment BoardMARK BLINCH/Reuters

Canada's largest institutional shareholders want to meet directly with boards of directors of major companies about corporate governance concerns, and say boards should not fear being pressured to disclose confidential corporate information.

The chief executive officers of two major Canadian pension plans told a governance conference in Toronto Thursday that shareholders are increasingly asking to talk privately with boards - without management or lawyers present - about issues such as executive compensation, succession planning and board member composition.

David Denison, CEO of the Canada Pension Plan Investment Board, has participated in 35 meetings with boards of Canadian companies since becoming chairman of the Canadian Coalition for Good Governance, an advocacy group representing most of Canada's largest institutional investors.

"It works best if both parties are seeking an open, candid conversation," he told a conference organized by the Institute of Corporate Directors. "After all, we have exactly the same interests at heart - good governance of the company."

While many U.S. boards refuse to meet independently with shareholders because of legal fears over disclosing confidential information about the company, Canadian companies have begun opening up to shareholders over the past few years, and directors are increasingly willing to meet privately without management or advisers in the room.

Mr. Denison said the CCGG doesn't want to discuss confidential business matters and, in fact, that it causes problems for investors if they become privy to such information, even if accidentally. For example, investors face restrictions on trading shares if they have insider information.

Peter Dey, a lawyer and governance advocate who is chairman of Paradigm Capital Inc., said it is important that boards get to know their major shareholders, and there is no legal reason why they cannot discuss governance issues such as board composition.

He added it changes the "chemistry" of the meeting if the board insists on having its lawyer present because of disclosure concerns.

"If any board chair gets a call from a significant institutional shareholder, I can't imagine that being rejected," Mr. Dey said.

Ontario Teachers' Pension Plan CEO Jim Leech said that at the first meetings with corporate boards he attended as a CCGG member, the board members were cautious and reserved. But discussions have become more frank and productive as directors have grown comfortable with the concept of speaking directly to shareholders, he said.

"I think we can point to a whole bunch of specific gains made through that process without having to run proxy contests and getting very confrontational," Mr. Leech said. "It works."

Corporate director Mary Mogford, who sits on the board of Potash Corp. of Saskatchewan Inc., said it was helpful that the board had built relationships with its big shareholders when the company faced a $39-billion takeover bid from BHP Billiton Ltd. last year. Many of the company's large shareholders shared information about the "pulse" of the investment community during the takeover process, and even told Potash about communications they had received directly from BHP, she said.

"From my own perspective, this was invaluable," Ms. Mogford noted.

She said she had a different experience with another company that had "lost track" of its shareholder base and was an easier target for a takeover bid.

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