On January 21, 2015, in the midst of a contentious proxy battle commenced by dissident shareholders of Aberdeen International Inc. (“Aberdeen”), Justice Wilton-Siegel of the Ontario Superior Court of Justice dismissed the dissidents’ motion for relief in connection with a requisitioned shareholders meeting scheduled for February 3, 2015 (the “Meeting”).1 Cassels Brock & Blackwell LLP represented Aberdeen and certain of its directors and officers in this matter.
Among the relief sought by the dissidents was the appointment of an independent chair, a declaration that management’s form of proxy was invalid and a request that the Court intervene and impose certain additional protocols related to the conduct of the Meeting.
On the issue of the appointment of an independent chair, the Court confirmed that the dissidents are required to provide evidence of impropriety (such as a demonstrated serious conflict of interest or a fettering of the chair’s discretion) before the Court will replace a proposed meeting chair – speculation and expressions of concern are not sufficient. Moreover, the Court confirmed that “taking sides in a contested proxy fight is not, on its own, a basis for requiring an independent chair.” On the facts before him, Justice Wilton-Siegel concluded that there were no circumstances to justify the appointment of an independent chair in this case.
The Court also reviewed and considered the forms of proxy submitted by both management and the dissidents. The Court found that management’s form of proxy conformed with the resolutions proposed for the meeting and reflected the text of the resolutions contemplated by the dissidents’ requisition. The relief sought by the dissidents would have, in effect, asked the Court to impose a different resolution than was contained in the requisition. The Court found that there was no basis to interfere in such a manner. In addition, the Court recognized the importance of allowing individual votes in respect of the incumbent directors being challenged by the dissidents and found that it was the dissidents’ form of proxy that may lead to confusion, preferring management’s form of proxy.
Finally, the Court declined to intervene on certain technical and other meeting protocol issues, including whether the dissidents’ slate complied with the company’s by-laws, in advance of the meeting and left such issues to be decided by the chair of the meeting in the context of the actual voting results.
This decision confirms the high standard that dissident shareholders will have to meet before a Court will take the extraordinary step of interfering in advance of a shareholders meeting. This decision follows previous decisions, including Maudore Minerals Ltd. v. Harbour Foundation, 2012 ONSC 4255, which confirm that the appropriate course of action is to await the results of the meeting before seeking relief from the Courts unless there is clear evidence of wrongdoing.
Following Justice Wilton-Siegel’s decision, and after proxy results demonstrated significant support for the incumbent board, the dissidents ultimately withdrew their request for the Meeting along with the balance of their court application (which sought broader relief than those issues raised on the motion) and agreed to a five-year standstill agreement.