Catalyst, which held a small equity stake in Corus Entertainment Inc. ("Corus"), sought to challenge certain aspects of Corus' acquisition of Shaw Media Inc. from Shaw Communications Inc. ("Shaw"). The acquisition was a related party transaction under Multilateral instrument 61-101 – Protection of Minority Security Holders in Special Transactions and was subject to approval by minority shareholders of Corus.
Corus and Shaw announced the transaction in early 2016 and a meeting of Corus shareholders was called for March 9. Catalyst opposed the acquisition and sent a dissident proxy circular to shareholders of Corus soliciting proxies to be voted at the shareholders meeting, including sending a dissident proxy circular to shareholders of Corus. On March 4, Catalyst filed its application with the OSC seeking standing and for certain orders, including an order requiring Corus to amend and supplement its management information circular (which it had disseminated to shareholders in advance of the meeting). The order, if granted, would have required Corus to delay the shareholders meeting. At the hearing, Catalyst limited the scope of its complaints to allegations related to insufficient disclosure by Corus. In particular, Catalyst criticized the issued management information circular by alleging that it contained multiple material misstatements. In its decision, the OSC found that there was no prima facie case of inadequate or materially misleading disclosure.
The OSC noted that "the ability of a private party to bring an application under section 127 is intended to be an extraordinary circumstance. We would not shy away from granting standing where an application may reasonably prevent unfair, improper or fraudulent practices or offer redress for minority shareholders involving disclosure or otherwise. In our view, the range of issues raised by the Application do not require invoking the full machinery of a public interest hearing when the information complained of was known, analyzed and disseminated."
In its decision, the OSC also referred to the fact that the application had been brought five days before the date scheduled for the shareholders meeting and stated that "To permit the Application at this late stage would interfere unduly with the justified expectations of participants in our marketplace, including minority shareholders, regarding the timetable for implementing corporate transactions." The OSC commented that an "activist investor", like any investor, may raise concerns under the public interest jurisdiction, and that the OSC is not influenced by an investor's designation in this regard. The OSC also stated that the relatively small size of Catalyst's stake did not have a bearing on the decision.