A recent decision of the Ontario Superior Court of Justice may have broader application in proxy fight litigation concerning shareholder lists. Under Canadian corporate law, shareholders have limited rights to corporate records. Pursuant to statute, shareholders are entitled to obtain from the corporation the names of all shareholders, the number of shares owned by each shareholder and the address of each shareholder as shown on the records of the corporation. But does the term "address" include "email address"?
The Court addressed this very question in Hemming v. JAZZ.FM 91 Inc.1 when a dissident member ("Mr. Hemming") argued that a not-for-profit corporation ("JAZZ.FM") had to provide him with copies of members' email addresses under Ontario's Corporations Act, RSO 1990, c C.38 (the "Corporations Act"). The Court agreed with Mr. Hemming.
FACTS
JAZZ.FM is a not-for-profit, non-share corporation incorporated under the Corporations Act. It operates a popular jazz radio station on the 91.1 FM frequency in Toronto.
Under the Corporations Act, JAZZ.FM was required to maintain a register of its members—akin to shareholders—including their "addresses". JAZZ.FM was also obligated to provide a copy of that register to any member who affirmed in an affidavit that they would only use the information for corporate purposes, which is similar to the obligation of corporations governed by other Canadian corporate law statutes.
Pursuant to its by-laws, JAZZ.FM maintained members' email addresses in the members' register whenever available. JAZZ.FM regularly used email to communicate with its members, including to solicit proxies for annual general meetings ("AGMs").
Mr. Hemming sought a copy of the members' register, including email addresses, so that he could communicate with other members in contemplation of a potential proxy contest. JAZZ.FM provided Mr. Hemming with a copy of the register with members' postal addresses, but refused to provide email addresses on the basis that doing so would infringe on members' privacy interests.
Mr. Hemming sought judicial relief from the Superior Court.
DECISION
The Court agreed with Mr. Hemming, holding that the term "address" in the Corporations Act includes email addresses. Among other things, the Court applied a purposive interpretation to the term "address" and found that JAZZ.FM's board was not motivated by members' privacy interests:
Among the purposes advanced by allowing members/shareholders to access the list of members is to allow shareholders/members the means to requisition a shareholder meeting. The Respondent JAZZ.FM has decided to withhold electronic address information. That narrow view of its obligations to provide addresses was clearly adopted to frustrate the applicants and not – as suggested – out of concern to maintain privacy.
...
I expect that an honest and open response to a dissident campaign that does not needlessly waste the time and resources of dissident and corporation alike will follow this. The membership will have the last word and this will not be solicited in a manner that places needless/pointless obstacles in favour of communication.2 (emphasis added)
In awarding costs to Mr. Hemming, the Court emphasized that "tossing roadblocks in the way of democracy is not a very helpful use of the corporation's money".
Subsequently, Mr. Hemming communicated with members using email, requisitioned a special meeting, and prevailed in the proxy contest.
TAKEAWAYS
- The Hemming decision is, to our knowledge, the first time a Canadian court has considered whether members/shareholders have the right to access email addresses of their fellow members/shareholders when those email addresses are maintained by the corporation.3
- The reasoning in Hemming has potential application in other disputes concerning the extent to which a shareholders register and relevant corporate records are shared with shareholders. The Court's purposive interpretation discourages boards from applying an overly technical approach to avoid addressing legitimate shareholder demands.
Footnotes
1 Hemming v. JAZZ.FM 91 Inc., 2018 ONSC 7781 (Commercial List); stay refused in Hemming v. JAZZFM91 Inc., 2018 ONSC 7783 (Div Ct)
2 Ibid. at paras. 3, 5.
3 In Jacobs v. Ontario Medical Association, 2016 ONSC 4977, the Ontario Superior Court of Justice refused to order the not-for-profit corporation to disclose members' phone numbers. But the corporation had already voluntarily disclosed email addresses.
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