The year 2015 was significant for proxy contests in Canada, with
a total of 55 contests, exceeding the previous record high of 43
contests set in 2009. Although the spike in the number of contests
in 2015 may have been exceptional, coinciding with a period of
economic downturn in Canada and continued deterioration in
commodity markets, the number of activist contests has shown a
relatively steady trend upward, from single digit occurrences in
the early-to-mid 2000s to 30, 32 and 30 contests in 2012, 2013 and
2014, respectively. Backed by these numbers, a consensus has formed
that shareholder activism has established itself as a permanent
feature in the landscape of Canadian corporate governance.
The number of proxy contests alone is not the full measure of
the extent of shareholder activism. Past public successes by
activists have motivated boards of public companies to engage with
activists privately and to implement changes where a convincing
case is made by the activist without the dispute ever entering the
public arena. In addition, the influence of activists, coupled with
the increased focus of regulators, investors and other market
participants on corporate governance and shareholder democracy, has
prompted many public companies to be proactive in addressing
perceived problems in their governance or performance in an effort
to ward off activist overtures even before they emerge.
This article discusses activism trends in Canada and some of the
principal issues and challenges faced by both activists and target
companies. It also highlights notable differences between Canadian
and U.S. activist campaigns and the legal environment in which
activists operate. Topics include the following:
The Right to Requisition a Shareholders' Meeting
Stake-Building and Beneficial Ownership Reporting
Group Formation: Insider Trading and Joint Actor
Voting Shares Acquired After the Record Date
Short Slate Proposals
Limited Private Proxy Solicitation and Advance Notice
Public Proxy Solicitation and the Broadcast Exemption
Compensation Arrangements for Director Nominees
Proxy Access: Nominations for Directors Through Shareholder
Vote Buying: Soliciting Dealer Fees in Proxy Contests
Regulatory Developments with Respect to Proxy Advisory
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.
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