Canada: Strategies For Protecting Companies In Proxy Contests

A recent trio of hotly contested proxy fights involving Norton Rose Fulbright's Special Situations team helped further clarify and define the rights of a board of directors to determine the timing of a shareholders' meeting.

Bioniche Life Sciences Inc.

With the July 18, 2013, decision of Justice Brown of the Ontario Superior Court in Wells v Bioniche Life Sciences Inc.,1 Norton Rose Fulbright obtained an important victory for its client Bioniche Life Sciences Inc. Justice Brown's decision affirms and clarifies that a reasonable exercise of business judgment by the board of directors in setting the timing for shareholders' meetings should not be interfered with by dissident shareholders or the court.

On April 25, 2013, William Wells sought to requisition a meeting of Bioniche shareholders with a view to replacing Bioniche's incumbent board. A special committee of the board was formed to address the issues raised by the requisition.

Ultimately the board, on the recommendation of the special committee, rejected the requisition as invalid on the bases that (i) Mr. Wells was not a registered holder of Bioniche shares; and, (ii) the requisition lacked sufficient detail regarding the business proposed to be conducted at the meeting (which, in the case of a requisition for a meeting to elect new directors, would include the names and qualifications of the proposed nominees). On that same day, the board also resolved to call its annual shareholders' meeting for November 5, 2013, with a record date of September 9, 2013.

On May 14, 2013, Mr. Wells submitted a second requisition for a shareholders' meeting, which corrected the deficiencies in his first requisition. Bioniche's board rejected this second requisition on the basis that a record date for a scheduled meeting of shareholders had been fixed and notice of it had been given to shareholders in accordance with the Canada Business Corporations Act (CBCA). The board also made clear its considered determination that a special shareholders' meeting in advance of the November 5, 2013, meeting was not in Bioniche's best interests.

In response, Mr. Wells commenced an application asking the court to declare the validity of the requisitions he made on April 25 and May 14 and to direct the holding of a special shareholders' meeting. At the same time, relying on section 143(4) of the CBCA, Mr. Wells purported to call a special meeting of shareholders for August 27, 2013, with a record date of July 22, 2013. Bioniche argued that neither requisition was effective and that, once the board had called a shareholders' meeting in accordance with the CBCA, Mr. Wells had no right to call his own meeting.

In the final result, Bioniche was wholly successful in the application. Important aspects of the decision include:

  • The court confirmed that Bioniche was entitled to reject Mr. Wells's first requisition on the basis that he was not a registered shareholder and the requisition was defective in failing to provide the names and biographical information about Mr. Wells's proposed board nominees.
  • The board's decision to reject Mr. Wells's second requisition on the basis that it had already fixed a record date with notice—for a meeting to be held approximately 6 months from the time of the requisition—was a reasonable exercise of the board's business judgment.
  • Although Mr. Wells had the right to call the requisitioned meeting under the CBCA, given the particular circumstances in this case, he was not entitled to hold such meeting. This decision was made based on the absence of real evidence of urgency by Mr. Wells and the combination of: (i) the length of time that elapsed before Mr. Wells called the requisitioned meeting, (ii) no prejudice accruing to the dissidents by waiting for the November meeting date, and (iii) the cost to the company of holding two shareholder meetings in quick succession.

Intrinsyc Software International, Inc.

Justice Brown's ruling in the Bioniche case builds on the decision of Justice Mesbur of the Ontario Superior Court in Marks v Intrinsyc Software International, Inc.,2 a case in which Norton Rose Fulbright successfully represented the special committee of the board of directors of Intrinsyc Software International, Inc.

On December 10, 2012, Mr. Marks requisitioned a special shareholders' meeting at which he sought to replace Intrinsyc's board of directors. Intrinsyc's board, on the considered recommendation of a special committee that was struck to address the requisition, responded to the requisition on December 20, 2012, by calling a combined annual and special shareholders' meeting for May 14, 2013—155 days after Mr. Marks made his requisition and 146 days after the company gave notice of the meeting.

Unhappy with the date scheduled for the requisitioned meeting, Mr. Marks applied to the court, asking it to exercise its power under section 144 of the CBCA to set an earlier date for the requisitioned shareholders' meeting. Mr. Marks wanted the requisitioned meeting to be held on February 28, 2013. Underlying Mr. Marks's position was an argument that the board had an obligation to schedule the earliest possible meeting date in response to a shareholder requisition.

In defending the board's decision, Intrinsyc pointed to numerous factors considered by the board and its special committee in setting the date for the combined meeting, including:

  • The cost of holding two shareholder meetings within a two-month period.
  • The distraction that two meetings would cause for management of a company in the middle of a strategic review.
  • The company's interest in avoiding shareholder fatigue and the corresponding risk of minimal shareholder participation.
  • The value to shareholders of having the company's financial statements publicly released prior to deciding the fate of the board.

These arguments were accepted and endorsed by Justice Mesbur when she rejected Mr. Marks's application. In her decision, Justice Mesbur stated that the role of the court "is to determine whether the board applied the appropriate degree of prudence and diligence in coming to its decision on the timing of the special meeting." She agreed with the position advocated on behalf of Intrinsyc, and stated that, "It is not so much the length of the delay, or the timing of the meeting, but the reasons for it that must inform my analysis of whether the board is acting appropriately." She went on to hold that the considerations made by the special committee and the board in determining the meeting date were a reasonable exercise of business judgment and should therefore not be interfered with by the court.

Agrium Inc.

The board's judgment in choosing a date for the shareholders' meeting played a key role in Agrium Inc.'s successful defence against activist shareholder JANA Partners LLC. In this case Norton Rose Fulbright was counsel to the special committee of the board of directors.

In the circumstances of an aggressive attack from JANA Partners, which was causing ongoing disruption to Agrium's business, the board called an early shareholders' meeting. Accordingly, on February 15, 2013, Agrium gave notice that its annual shareholders' meeting, at which shareholders would have the option of re-electing Agrium's incumbent board or electing a board proposed by JANA Partners, would occur on April 9, 2013.

The decision to hold the meeting only 53 days after it was called permitted Agrium to focus its efforts on the proxy contest for a relatively short time, thereby minimizing the distraction to its core business and to management that was arising from JANA Partners' aggressive and public attack.

Norton Rose Fulbright's Special Situations team provided creative solutions to address novel issues that arose in the context of this particularly aggressive and public proxy contest, including:

  • The dissidents' attempted use of nominee incentive, or so-called golden leash, payments.
  • The use of dealer solicitation arrangements.
  • The role of proxy advisory institutions such as ISS and Glass Lewis.

These recent cases are examples of Norton Rose Fulbright's leading expertise in creating new law and practice in Canada on fundamental issues in shareholder activism, including empty voting, board duties during a proxy contest, the definition of solicitation, the definition of acting jointly or in concert, advance notice bylaws, independent chairpersons and shareholder requisitions.


1 2013 ONSC 4871.

2 2013 ONSC 727.

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.