Canadian corporate directors worried about the possibility of activist investors stealthily lurking in the shadows will soon have a new method of defence.
The goal of the sneak attacks is to prevent directors targeted by activists from rallying shareholder support, thereby making it easier for them to be removed. Some question whether the tactic isto require companies to adopt a new bylaw, but Walied Soliman, chair of Norton Rose Fulbright Canada, says updates to the Canada Business Corporations Act that took effect last year created a loophole that needs to be closed.
“Companies, especially those who have a low turnout or have never run an investor campaign around their annual meeting, are increasingly at risk,” said Ian Robertson, chief executive officer of Kingsdale Advisors, a Toronto-based consulting firm that works with public companies on issues involving shareholder votes. “With no cost and no transparency required, these guerrilla-style attacks will continue to threaten to throw boardrooms into chaos.