Guide to Shareholder Activism and Proxy Contests in Canada

In addition, in Bioniche , the Court found the shareholder’s requisition to be invalid because the dissident proposed the removal of the directors but did not provide any names or biographical information for new directors to be proposed by the dissident. The Court’s finding in Bioniche constituted a new court-imposed requirement since the corporate statute did not in fact contemplate that a shareholder requisitioning a meeting to remove directors will necessarily propose nominees to fill the vacancies created by the removals. Consequently, a requisitioning shareholder will typically have to recruit its nominees well in advance of the date by which notice would be required under the company’s advance notice bylaw (typically 30 days) prior to the meeting. TIMING OF MEETING Canadian courts have interpreted the directors’ statutory obligation to “call” a meeting within 21 days of the requisition as being satisfied simply by the announcement of a date for the meeting. The board need not actually hold the meeting or even mail a notice of meeting within the 21 days. Rather, the meeting must be held within a reasonable time determined in the good faith business judgment of the directors. What is regarded as a reasonable time will depend on the circumstances — for example, whether the requisitioned meeting pertains to a specific transaction or pending event and whether the requisitioning shareholder would be prejudiced by delay. Delays as long as four to seven months have been accepted by the courts. Often, boards responding to a requisition will schedule the requisitioned meeting to be held at the same time as the annual general meeting, even if the annual meeting is as much as six months away. This was the case in Marks v Intrinsyc Software International 3 ( Intrinsyc Software International ), in which the board, citing the disruption and expense of holding a separate special meeting of shareholders, scheduled the requisitioned meeting for the same time as the annual general meeting, 155 days after the date of the requisition. In considering the dissident’s complaint over the delay, the Ontario Superior Court deferred to the business judgment of the board, accepting as reasonable the board’s scheduling of the requisitioned meeting to avoid unnecessary costs. More recently, however, in reviewing a board’s decision to hold a meeting five months after the date of the requisition, the Ontario Superior Court questioned the board’s business judgment in its exercise of discretion in calling a meeting of trustees . In Sandpiper Real Estate Fund 4 Limited Partnership v First Capital Real Estate Investment Trust 4 ( Sandpiper ), two unitholders of a REIT requisitioned a meeting of unitholders with the goal of replacing four of nine of the issuer’s trustees to oversee the implementation of a capital allocation plan, which included the sale of certain assets by the issuer. The activists requisitioned the trustees to hold a unitholder meeting no later than March 1, 2023, but the board called a combined annual and special meeting of unitholders for May 16, 2023, five months after the requisition.

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2013 ONSC 727. 2023 ONSC 794.