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
10 SHAREHOLDER ACTIVISM "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." "The considered wisdom amongst people in the M&A game has been that Canadian companies were sitting ducks and really had inadequate defences to take-overs. We have many of the same issues with respect to the ability of active shareholders compared with other countries." For example, he says, Canada's reporting threshold for share accumulation is 10 per cent whereas in most other countries it's 5 per cent, so "they have a little extra warning" that someone is amassing their shares. "We also permit shareholders to call meetings with a 5 per cent requisition. That doesn't exist in other countries. Our insider trading reports are 10 days after the fact. Our early warning reports are at 10 per cent and have to be done right away — unless you're an institutional investor, then you can file monthly, so no one knows you're coming." Until fairly recently, activist shareholders in Canada were interested in process — such as splitting the roles of chair and CEO, executive compensation and say-on-pay, says Noralee Bradley, a partner at Osler, Hoskin & Harcourt LLP in Calgary. But that focus has clearly changed. "Now I see the trend that shareholders and management want to engage with the board on strategy," says Bradley. "Shareholders are wanting to engage about what you're doing — and sometimes they have ideas about what you should be doing." Not all dissatisfied shareholders want to launch a proxy or take-over battle, says Bradley, who often advises M&A and financings as well as corporate and board governance. "They're very expensive, they have to have a war chest. That said, you're seeing a lot more institutions willing to come out publicly with their ideas if they don't get some sort of buy-in or consideration of their ideas at the board management level." New rules adopted by the Toronto Stock Exchange have abolished the election of entire slates of directors, requiring an individual vote for each director. That makes it tougher for the company to ram through its desired board — and easier for an activist shareholder to get a seat at the table. Bradley says she has developed a tool that can be used in cases where a dissident wants to turf out a majority of the board. She calls it an "enhanced-quorum requirement." It is a provision that stipulates any meeting at which a group of shareholders wishes to re- m sh b ch re a In ci p co LEXPERT® RANKED LAWYERS RANKED LAWYERS Cherney, Richard D. Chernin, Lawrence S. Cockburn, Matthew Colpron, Jean-Pierre Davies Ward Phillips & Vineberg LLP (514) 841-6457 rcherney@dwpv.com Goodmans LLP (416) 597-5903 lchernin@goodmans.ca Torys LLP (416) 865-7662 mcockburn@torys.com Mr. Chernin has over 25 years' experience in high-profile Canadian and international M&A, public company and privateequity transactions. He has acted in connection with public offerings including debt financings and cross-border offerings. Mr. Cockburn's corporate and securities practice focuses on public and private M&A, private equity and corporate finance. His clients include Canadian and US PE firms, pension funds, public issuers and underwriters. Norton Rose Canada LLP (514) 847-4880 jean-pierre.colpron@ nortonrose.com Mr. Cherney represents private and public companies in his varied practice that focuses on the life sciences, financial services, retail and technology sectors. He advises on capital markets, corporate governance, M&A and PE matters. ROB.indd 10 Mr. Colpron focuses on private M&A, complex domestic and crossborder corporate and tax structures, creation of private-equity funds, commercial agreements, domestic and foreign joint ventures and equity investments in infrastructure projects. Cotnoir, Frédéric Craig, John H. Cro McCarthy Tétrault LLP (514) 397-4407 fcotnoir@mccarthy.ca Cassels Brock & Blackwell LLP (416) 869-5756 jcraig@casselsbrock.com Dav &V (41 icro Mr. Cotnoir's practice focuses on corporate finance, mergers and acquisitions, corporate governance and the regulation of financial institutions. His clients include publicly traded corporations, underwriters, banks and other financial institutions. Mr. Craig's securities practice focuses on equity financings for underwriters and issuers, with an emphasis on resource companies, M&A, take-over and issuer bids, goingprivate transactions, and international mining and oil and gas agreements. Mr. and prac and reor and priv fina corp and 13-04-23 12:05 PM