Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1484268
32 www.lexpert.ca Top 10 Business Decisions WRITTEN BY AIDAN MACNAB, BERNISE CAROLINO, JASON TAN, AND ANGELICA DINO ROGERS (RCI), the massive public tele- communications and media company, is primarily controlled by the Rogers family. Last year, an inter-familial power struggle over the composition of the board of direc- tors ended up in court. Edward Rogers led one faction. e other faction included RCI and Edward's mother and sisters. During RCI's purchase of Shaw Commu- nications, Edward had concerns with RCI's CEO Joe Natale's performance and sought to replace him with Tony Stafferi, RCI's CFO. e board of directors approved Natale's res- ignation, but a new resolution initiated by the other faction sought to rescind it. e conflict between the two factions con- tinued. Aer the board removed him as chair- man, Edward used a consent resolution and his voting power as chairman of RCI's controlling shareholder to unilaterally remove and replace five independent directors of the board. shareholders with the right to vote, and not inviting non-voting shareholders was merely Rogers' past practice. "It was pretty clear that Edward was going to win. ere really wasn't any legal doubt," says Michael Osborne, chairman of the Canadian competition practice at Cozen O'Connor. He says the ruling emphasizes the im- portant substantive difference between BC's corporate statute and others, including Ontario's. While most corporate statutes re- quire a consent resolution of shareholders be unanimous, in BC, a two-thirds majority of voting shareholders is sufficient. Justice Shelley Fitzpatrick gave a "black-letter-law decision" and said that the company's ar- guments did not displace the fundamental question of whether Rogers' incorporation articles required a shareholders' meeting to remove and replace directors. "Effectively, in my view, Rogers – the com- pany – was asking the court to erase the differ- ence between voting and non-voting shares," says Osborne. "And Justice Fitzpatrick refused to do that." It's an important decision on how we interpret corporate statutes and corporate articles and whether policy-based arguments around concepts like shareholder democracy should overwhelm the words of the statute, he says. "And the answer, from Justice Fitzpatrick at least, is that they don't." ROGERS V. ROGERS COMMUNICATIONS INC., 2021 BCSC 2184 • Rogers Communications Inc. > Goodmans LLP, Nathanson Schachter & Thompson LLP > David Conklin, Chris Sunstrum, Bob Vaux, Brenda Gosselin, David Lederman, Monica Creery, Kirby Cohen, Caitlin Woodford, Stephen Schachter, Julia Lockhart, and Caitlin Ohama-Darcus • Edward Rogers > McEwan Cooper Dennis LLP, Lax O'Sullivan Lisus Gottlieb LLP > Ken McEwan, Emily Kirkpatrick, William Stransky, Jonathan Lisus, Crawford Smith, Matthew Law CLIENTS > FIRMS > LAWYERS On Oct. 26, 2021, Edward sought to have the consent resolution declared valid. RCI opposed the petition and asserted that the board members were not validly removed and that the previously instituted board remained in place. A British Columbia Supreme Court granted Edward's petition. e court found that the definition of a consent resolution meant a resolution con- sented to in writing by shareholders holding at least two-thirds of voting shares in general meetings. Contrary to RCI's assertion, there was nothing in the Business Corporations Act, SBC 2002, c 57 that mandated an "actu- al" meeting was necessary, said the court. Rogers has a dual-class share structure, with voting and non-voting shares. Edward Rogers controls 97.5 percent of the voting shares. e court also found that not inviting a class of non-voting shareholders did not con- stitute a failure to convene a meeting. e act states that the submission needs only those