The Ontario Superior Court of Justice (Commercial List) recently
confirmed that "demonstrated impropriety" is required to
warrant court intervention in the appointment of an independent
chair of a shareholders' meeting in a proxy contest. In
Meson Capital Partners, LLC v Aberdeen International Inc.
(Aberdeen),1 Norton Rose
Fulbright Canada's Special Situations Team successfully
represented the Special Committee of Aberdeen International Inc.
(the Company) on an Application brought by Meson
Capital Partners, LLC and Nightscape Capital (UK) LLP (together the
Dissidents) for relief in respect of a special
meeting of the shareholders of Aberdeen (the
Following the Dissidents' requisitioning of the Meeting,
Aberdeen's board of directors established a special committee
composed of three independent directors to direct all matters
pertaining to the dissident shareholders' proxy campaign (the
Special Committee). The Special Committee proposed
that one of its members, Bernard Wilson, chair the Meeting. The
Dissidents brought an Application seeking, inter alia, the
appointment of an independent chair of the Meeting. The Dissidents
argued that Mr. Wilson suffered from a conflict of interest that
brought his ability to conduct the Meeting fairly into question. In
part, the Dissidents took issue with Mr. Wilson's relationship
with insiders of Aberdeen. The Dissidents also challenged public
statements that Mr. Wilson made in the context of the proxy
The Court dismissed the Dissidents' request for the
appointment of an independent chair of the Meeting, citing its
earlier decision in Maudore Minerals Ltd v Harbour
where Norton Rose Fulbright Canada's Special Situations Team
also successfully represented the interests of a special committee.
Relying on Maudore, the Court in Aberdeen
described the current state of the law as generally requiring
evidence of a proposed chair's "demonstrated
impropriety" to warrant court intervention. Finding that there
was no concrete evidence of impropriety in the case before it, the
Court in Aberdeen held that the Dissidents'
"speculation and expressions of concern" were not
sufficient to warrant its exercise of discretion to intervene. The
Court noted that if the test could be expressed as the
demonstration of a likelihood that the proposed chair will not act
fairly and reasonably as a result of his or her previous actions or
other circumstances, there was similarly an absence of evidence to
this effect in respect of Mr. Wilson.
Importantly, the Court confirmed its holding in Maudore
that the appropriate course of action for dissidents seeking relief
in a proxy contest is to "await the results of the Meeting,
including any material determinations of the chair, and to apply to
[a court] for relief under [applicable business corporations
legislation] at that stage if they feel there has been some error
or impropriety in the conduct of the Meeting."
Aberdeen serves as a reminder to dissidents seeking
pre-meeting relief that mere speculation as to a proposed
chair's conduct at the meeting will not meet the threshold for
court intervention – the appropriate course of action is to
let the meeting take place first, and litigate after if
 2015 ONSC 532.
 2012 ONSC 4255.
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