May 2, 2017
Earlier this year, two Canadian banks faced votes on a shareholder proposal to adopt proxy access bylaws. Shareholders at Toronto-Dominion Bank passed the bylaw with a slim margin while RBC shareholders narrowly rejected the proposal. According to a Lexpert online article by Julius Melnitzer, these results leave the future of proxy access bylaws in Canada unclear and suggest that we’re going to see more debate and discussion about the topic going forward. Proxy access allows shareholders to nominate alternative directors to the board from the floor at annual meetings. In the article, Andrew MacDougall, Osler partner and corporate governance expert, explains the significance of the shareholders’ proposals.
“Proxy access has been a big deal in the U.S. because shareholders there don’t have the right to nominate candidates for election as directors, whereas we’ve had this statutory right forever,” Andrew says.
“The problem with the TD and RBC proposals is that they looked a lot like the U.S. version of proxy access,” he continues. “Still, it’s important to remember that the proposals did not seek to remove directors, but merely to provide a mechanism for a nomination process going forward.
“What institutional shareholders really want, if there is an issue about board composition or direction, is a dialogue. And if the board isn’t paying attention, proxy access should be there as a tool to bypass the board and go directly to the shareholders.
“The TD and RBC votes do not give rise to the conclusion that shareholders were unhappy with the boards or with the way the boards were communicating,” Andrew concludes. “Rather, the votes were ultimately a matter of proxy mechanics as a governance tool going forward.”
Read Julius Melnitzer’s full article, “Proxy access bylaws face uncertain future in face of two banks’ resolutions” in Lexpert.