In September 2012, we reported that the Supreme Court of British
Columbia had rendered a judgment (the Mundoro affair)
confirming that a corporate policy imposing an advance nomination
process for a shareholders' meeting was reasonable and did not
infringe the shareholders' rights relating to the election of
the corporation's directors ("Advance Notice
Policy"). We concluded at the time that Advance
Notice Policies are a tool that can prevent nominations in cases
where they might be enforced by ambush or by proxy contest. Nine
months later, we notice that Advance Notice Policies have been
adopted by numerous Canadian public corporations and that proxy
advisory firms such as Institutional Shareholder Services Inc. have
widely supported their implementation.
You can find a copy of a more detailed article on this matter by
Furthermore, since many Canadian public corporations are still
seeking to put in place other responsible defences against proxy
contests, we wanted to share with you that Canadian Oil Sands
Limited and other Canadian public corporations recently adopted
By-Laws", in addition, to Advance
Notice Policies, at their respective annual and special
shareholders' meetings. Enhanced Quorum By-Laws require a
minimum of two shareholders holding at least a majority of
the issued and outstanding common shares (an
Quorum") to be present or
represented by proxy at any meeting at which a shareholder will be
seeking to replace half or more of the board of directors, before
the meeting can be held and business validly transacted.
The Enhanced Quorum By-Law that was recently adopted by Canadian
Oil Sands Limited can be viewed in the corporation's Management
Information Circular by following this link.
This is different from the more standard practice among issuers
with respect to quorum at shareholders' meetings, which is
generally 10% of the shareholders, represented in person or by
proxy. The Enhanced Quorum requirement is intended to ensure the
enfranchisement of all the shareholders and that a material number
of shares are represented at shareholders' meetings, where such
a fundamental change to the business and strategic direction of a
corporation may occur. Enhanced Quorum By-Laws have recently been
adopted by at least four Canadian public corporations.
An Enhanced Quorum would provide a better framework to
shareholders for exercising their fundamental right to make
significant changes to the board of directors of a public
corporation. In the absence of an Enhanced Quorum for the
transaction of business at any meeting where the Enhanced Quorum is
required, those present and entitled to vote will constitute a
quorum for the purpose of (i) conducting all business other than
for the election of directors, and (ii) the adjourning of such
meeting. The meeting may be adjourned no more than twice for an
aggregate of no more than 65 days. If an Enhanced Quorum is not
present at the opening of the second adjourned meeting, if any,
those shareholders present and entitled to vote at that adjourned
meeting will constitute quorum for the transaction of business,
including the election of directors, at the adjourned meeting.
Many mining corporations whose activities are located in
the Plan Nord territory were recently found in situations where
nominations of directors were made through proxy fights or
ambush. Like Advance Notice Policies, Enhanced Quorum
By-Laws appear to be yet another answer to shareholder activism,
which has been growing and trending in Canada. Similarly to Advance
Notice Policies, Enhanced Quorum By-Laws will particularly benefit
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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