In a recent policy statement, the Canadian Coalition for Good
Governance ("CCGG") endorsed the use of
"universal proxies" whenever there is a contested
director election at a Canadian public company. A "universal
proxy" is a proxy voting form which lists all nominees for
election regardless of who nominated them (whether management or
dissident shareholder). Although there is nothing under corporate
or securities laws which prohibits a company or a dissident from
using a universal proxy, it is common practice for
Canadian issuers and dissident shareholders to solicit votes with
the use of proxies which only list their own nominees.
The CCGG's rationale for the policy is that the proxy voting
system should re-create as closely as possible the rights and
abilities shareholders have if they attend the shareholder meeting
in person. At a shareholder meeting, shareholders are
entitled to vote for any combination of nominees (whether nominated
by management or a dissident shareholder). On the other hand, if
there is a contested election and a universal proxy is not
employed, shareholders who do not attend the meeting and instead
vote by proxy may feel compelled to select directors from either
management's slate of nominees or from the dissident's
slate of nominees, but not from a combination of the two, thereby
limiting their choice.
In its policy, the CCGG advocates for legislative change that
would make the use of universal proxies in contested director
elections mandatory. Until that time, it urges companies and
dissident shareholders to use universal proxies voluntarily.
McCarthy Tétrault Notes
Universal proxies do not actually
provide shareholders with more choice. A shareholder is not limited
by the form(s) of proxy received as to how it can instruct its
proxyholder to vote on matters considered at the meeting. If it
does not like the options provided in the forms received, it could
prepare its own form of proxy (which could include a combination of
management and dissident shareholder nominees). This would take
time and effort, however. A universal proxy would make it more
convenient and practical for a shareholder to truly choose among
Many Canadian issuers have adopted
advance notice requirements into their by-laws establishing a
deadline by which a nominating shareholder must notify the issuer
of its intention to nominate directors from the floor of the
meeting and requiring that certain information be provided in
respect of the nominating shareholder and the nominees. For issuers
that decide to adopt the use of universal proxies in the context of
contested elections, these requirements could serve to establish a
helpful baseline for entitling a dissident shareholder to have its
nominees listed on the proxy.
The CCGG, an organization
representing the interests of institutional investors, may hold
more sway over the actions of issuers than those of dissidents. An
issuer could be left at a disadvantage if it uses a universal proxy
and the dissident does not. As a condition to using a universal
proxy in the context of a contested election, an issuer may
consider negotiating with the dissident to ensure that the
dissident will use its own universal proxy or that the two parties
use a common universal proxy.
 There have been notable uses of the universal proxy
in Canadian proxy contests, including by Canadian Pacific Railway
Ltd. in the context of the proxy contest involving dissident
shareholder Pershing Square Capital Management in 2012 and by
Aberdeen International Inc. in the context of a recent proxy
contest involving dissident shareholder Meson Capital Partners,
 This was also an important rationale for CCGG's
recent policy advocating the enhancement of proxy access in Canada.
See our discussion of that policy
here. As part of that policy, the CCGG encouraged issuers to
use a universal proxy for nominations made through the proxy access
procedure. The universal proxy policy goes further in encouraging
the use of universal proxies for any contested direction, not only
those resulting from nominations made in accordance with the proxy
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