The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.
Issue link: https://digital.carswellmedia.com/i/133445
no aid n P be p- ay ir na 't f- nal s SHAREHOLDER ACTIVISM 9 ficult to respond to," says Geraghty. "I think that's another tool we're going to continue to see shareholder activists use." She says institutional shareholders like CPP and Teachers – and Ackman's Pershing Square Capital Management LP – have fiduciary obligations of their own and are answerable to their own stakeholders. Some are also wrestling with issues such as pension deficits. So when they reach out to complain that the company is underperforming, the board can no longer just designate one person to listen, slap them on the back and send them on their way flattered at having had a hearing. "You cannot appeal to institutional investors anymore on anything other than a concrete value basis," says Geraghty, who advises on mergers and acquisitions and governance. "CP made that very clear because with CP everyone saw pressure could bring success, even with a large iconic issuer. I believe that has given shareholder activists the confidence that if they have good points, big institutions will vote with them. That is a very big change." That makes it vital for companies to engage with dissident shareholders very early on. Boards and management should be prepared to discuss the rationale behind the current strategy and willing to look closely at any measures being suggested to see whether they might make some sense — and, if they don't, explain why. Many companies have also started adopting measures to help protect themselves from surprise proxy battles in the event they fall out with an activist investor. One tactic that is quickly becoming popular is the advance-notice bylaw, which involves amending the corporate bylaws to require shareholders to give 30 to 65 days' notice in advance of the annual general meeting if they intend to nominate directors. "Advance-notice bylaws serve two purposes," says Mitchell Gropper, QC, a partner at Farris, Vaughan, Wills & Murphy LLP in Vancouver. "They prevent an ambush at the annual meeting and they can also serve as a defensive measure in a stealth proxy fight. We were involved in one not too long ago where the advance-notice bylaw actually prevented a proxy fight because it was too close to the AGM." Gropper, who often advises boards' independent committees, says the growth in shareholder activism in the past few years is "huge, huge, huge." He believes Canada's relatively lax take-over bid rules are part of the reason. Bursey, David W. Bull, Housser & Tupper LLP (604) 641-4969 dwb@bht.com Mr. Bursey's regulatory practice focuses on energy development, environmental regulation, Aboriginal law and water resource management. His primary clients are natural resource stakeholders, including industry associations and government agencies. ROB.indd 9 Cameron, QC, Glenn Cannon, Douglas A. Stikeman Elliott LLP (403) 266-9011 gcameron@ stikeman.com McCarthy Tétrault LLP (416) 601-7815 dcannon@mccarthy.ca Goodmans LLP (416) 597-4107 jcarfagnini@ goodmans.ca Mr. Cannon is a tax partner focusing on domestic and cross-border M&A, divestitures, reorganizations, financial products and investment funds. Also advises on tax aspects of business operations including transfer pricing, and acts in CRA disputes. Mr. Carfagnini's practice includes a focus on corporate reorganizations, with an expertise in crossborder and international transactions involving the US and the UK. He has been an advisor in most recent major Canadian restructurings. Mr. Cameron's corporate and energy law practice has a transactional focus. He advises on private equity investments, M&A, asset dispositions and the acquisition, development and financing of major energy assets. Clients include borrowers and banks. Carfagnini, Jay A. "I KNOW ISSUERS WHO HAVE BEEN UNDER THESE KINDS OF ASSAULTS COMPLAIN THAT DISSIDENTS DON'T HAVE ANY DISCLOSURE RULES TO WORRY ABOUT SO THEY CAN USE THE PRESS IN A WAY THAT'S VERY, VERY DIFFICULT TO RESPOND TO." Chadwick, Robert J. Chambers, Gordon R. Goodmans LLP (416) 597-4285 rchadwick@ goodmans.ca Cassels Brock & Blackwell LLP (604) 691-6106 gchambers@ casselsbrock.com Mr. Chadwick focuses on corporate, banking, private equity, insolvency and reorganizations, and M&A law on national, crossborder and international transactions. He counsels a diverse group of clients, including boards, in various industries. Mr. Chambers's securities practice embraces public and private offerings, regulatory requirements and M&A. His clients include special committees of boards, mining companies and dual-listed issuers, particularly TSX-listed Australian companies. 13-04-23 12:04 PM