Sinking share prices are leading shareholders on both sides of the border to launch proxy battles. But these days, in Canada, it is quite likely to be a US shareholder in the thick of action, challenging the establishment on a range of issues from board shake-ups to the right to requisition shareholder meetings.
Mark Gelowitz, chair of the National Corporate Governance and Securities Litigation Group at Osler, Hoskin & Harcourt LLP, believes that is changing.
He says a proposal being considered by Canadian securities regulators to allow boards to install poison pills and keep them in place up to a year - with shareholder approval - will likely lead to more proxy action.
“What that’s going to, create is a shifting of the litigation tactics in relation to poison pills, because what bidders will need to do, essentially, is fight a proxy battle on the shareholder vote to accept or reject a poison pill.
“It’s actually pretty early days on proxy litigation issues so far. But what I see in the future is as we get more and more of this, we’re going to have a ramping up of litigation in relation to those shareholder-meeting issues driven by an increase in activist investor activity.”
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