In Weyburn Inland Terminal Ltd. v The Director of
Corporations for Saskatchewan, 2014 SKQB 46, the Court of
Queen's Bench for Saskatchewan ordered dissident shareholders
of Weyburn Inland Terminal Ltd. (the
"Company") to revise their proxy
circular which suggested how shareholders should vote but
not why they should vote against a certain transaction
proposed by the Company. However, the Court did not go the extra
step of disallowing proxies which had been obtained pursuant to the
The Company called a special meeting of shareholders (the
"Meeting") in order to obtain approval
for a plan of arrangement with respect to a sale of all the
outstanding shares of the Company (the
"Plan"). Certain of the Company's
shareholders and former directors (the
"Dissidents") opposed the Plan and began
soliciting proxies for the Meeting. The Dissidents' proxy
circular (the "Circular") stated that
its purpose was to solicit votes against the Plan. The Circular
also set out procedural information for voting but did not provide
information explaining why shareholders should vote against the
Plan. The Company applied for the court's intervention in
respect of the solicitation.
The Court held that the Circular was deficient as it did not
provide any information setting out the Dissidents' plan for
the Company and thus, did not allow shareholders to form a reasoned
and informed judgment of the Plan. The Court ordered that the
Dissidents cease soliciting proxies based on the Circular and amend
it to include the Dissidents' proposals for the Company in the
event the Plan was defeated. The Court further ordered the
Dissidents to distribute the revised Circular together with a
letter of explanation and a revocation of proxy form. The Court
made this order pursuant to its general remedial jurisdiction,
sections 144 and 148 of The Business Corporations Act
(Saskatchewan), the regulations thereunder and applicable
The Court expressly refused to invalidate proxies obtained
pursuant to the Circular or halt future proxy solicitation by the
Dissidents, as the order would address any deficiencies which might
have misled a shareholder.
Although this case was decided pursuant to the SBCA, the
relevant provisions are essentially identical to those in the
Canada Business Corporations Act (the CBCA contains
certain exceptions which are not relevant to the facts in this
case). This case demonstrates that the purpose of the court's
supervision of proxy fights is to ensure that shareholders are able
to make a reasoned and informed judgment, not to 'punish' a
party for providing deficient materials. Here, the Court took the
least intrusive step in ordering that shareholders be provided with
additional information and did not impose further sanctions.
However, the deficiencies in this case were those of omission, not
commission. Had the Dissidents provided inaccurate (as opposed to
incomplete) information, the Court may not have allowed previously
solicited proxies to stand.
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