In a recent twist on activist investing, People for Ethical
Treatment of Animals (PETA) purchased shares in
SeaWorld in an effort to address conduct it considers animal
cruelty. According to PETA, it bought "the smallest number of
shares necessary" to give it "the right to attend and
speak at annual meetings and to submit shareholder resolutions
asking for policy changes".
SeaWorld is not the only corporation PETA has claimed ownership
in. PETA is using this same strategy with companies such as General
Electric, Schering-Plough and 3M, and with fast food restaurants
like McDonald's and Wendy's. Although in many cases its
shareholder proposal are being ultimately withdrawn, PETA is
successful in forcing corporations to discuss their treatment of
animals with PETA directly.
Activist investing is a relatively inexpensive tool for policy
activists looking to push their social agendas onto a corporate
vehicle. PETA only had to spend $2,273.70 to acquire 80 shares in
SeaWorld to gain the right to bring forward shareholder proposals
to all of SeaWorld's shareholders at the company's general
Canadian corporations are not sheltered from this kind of policy
activism. Under the Canadian Business Corporations Act,
policy activists only have to own $2,000 in stock to bring forward
a shareholder proposal. For a nominal investment, shareholders are
given a very powerful tool to demand a debate on policy issues.
The rights of a shareholder with a $2,000 equity interest are
tempered by statute. The proposal need not be sent to shareholders
if, among other things,:
its primary purpose is to enforce a personal claim;
it does not significantly relate in any way to the business or
affairs of the corporation; or
the right to bring a proposal is being abused to secure
However, sophisticated policy activists will attempt to work
around such restrictions. In those circumstances, companies require
an equally sophisticated response. The Norton Rose Fulbright
Special Situations Team has been engaged in three similar
situations over the past few years, each involving corporations
with a market capitalization in excess of over $1 billion.
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