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Fasken Report: Activist Shareholders Gain Upper Hand In Canada

US companies fighting off activist shareholders might want to take stock of an updated look at proxy contests in Canada, where dissidents appear to be gaining the upper hand. So reports international law firm Fasken in its latest review of proxy disputes involving public companies in Canada.
Fasken examined eight major proxy battles waged against Canadian companies in 2017 – with activists winning a majority of them (five). Notably, most campaigns were launched by outside shareholders rather than former management groups. Activists included institutional investors, who succeeded in four of five contests they initiated.
Given the strong shareholder results, Fasken titles its latest report “The Dissidents Fight Back.” A copy of the 2018 proxy contest update can be viewed here:
“For the first time in three years, dissidents had success in a majority of formal board-related proxy contests,” said Fasken M&A partner Aaron Atkinson. “In addition, more contests were initiated by outside activists than by current or former management.”
The firm tracked eight proxy contests involving companies in the mining, energy, life sciences and diversified industrial sectors. Fasken notes that proxy battles in the country have fallen off sharply since their peak in 2012, when 23 contests were launched throughout Canada.
Only two of the challenges were waged against mid/large cap companies, with five of the remaining contests focused on micro-cap concerns.
“Most of the action focused on micro-cap companies, but a quarter of the contests involved large cap companies, an increase over 2016,” said M&A partner Bradley Freelan. “Also of note, institutional activists came off the sidelines in 2017, achieving full or partial success in four of five contests launched.”
Mr. Atikinson regularly advises corporate boards and board committees in contested take-over transactions, proxy contests, internal investigations and day-to-day governance issues.
Mr. Freelan focuses on M&A transactions, shareholder activism and corporate finance. He’s advised clients in numerous contested situations, including hostile take-over bids, topping bids and proxy contests, and has significant experience representing acquirors and targets in connection with negotiated transactions.