Following the adoption of advance notice provisions by our
clients commencing in October 2011, we publically advocated the
adoption of advance notice provisions by Canadian public companies
in concluding that an "advance notice by-law is an important
tool for a public company in order to ensure that all shareholders
are treated fairly and are provided with timely information in
connection with the nomination of directors."1
Advance notice provisions are usually used in Canada to prevent
shareholders from nominating directors through a dissident proxy
circular or from the floor of a meeting, without in each case
providing an issuer with adequate time to consider and respond in
an informed way to such proposed nominations – advance notice
provisions are generally not used in circumstances where
nominations are made by shareholder proposals or pursuant to the
requisition of a shareholders' meeting.
As we come to the end of the 2013 proxy season, we thought it
would be informative and helpful to review the rate of adoption of
advance notice provisions. We have concluded that, as of June 28,
2013, advance notice provisions have been announced, implemented or
adopted as by-laws, board policies, by way of the amendment of
articles and by amending declarations of trust by more than 500
Canadian public companies or trusts.2 In March 2012, we
stated that "[i]t is expected that over the next few years,
numerous Canadian public companies – particularly mid and
micro-cap companies – will implement such
by-laws".3 As it turns out, the rate of adoption
has been more significant than we originally thought, and it is
fair to say that advance notice provisions are now commonplace in
With this rapid adoption of advance notice provisions, we
thought it would be helpful to review advance notice provisions to
consider various issues, including:
the specific terms and conditions of advance notice provisions
that are being adopted,
the manner in which advance notice provisions are being
implemented – by board policy, bylaw, amendment of articles
or amendment of declaration of trust,
the results of votes taken to approve advance notice
the impact that proxy advisory firms are having on the adoption
of advance notice provisions.
We intend to publish the results of our review by August,
2 Being companies incorporated under the Canada Business
Corporations Act or under one of the applicable provincial or
territorial statutes, or trusts governed by the laws of a province
or territory of Canada.
3 Supra note 1.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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