CANADA Law and Practice Contributed by: Sarah Gingrich, Sean Stevens, Tracy Hooey and Marie-Josée Neveu, Fasken
company compared to other jurisdictions where pub - lic companies may be more widely held than many public companies in Canada. See also 1.2 Corporate Governance Legislation and Regulation . 4.3 Shareholder Meetings Canadian companies are required to hold an AGM. This must occur not later than 15 months following the last AGM or six months following the company’s most recent financial year end. AGMs and other shareholder meetings are conducted in accordance with the com - pany’s by-laws. The principal business conducted at AGMs in Canada is: • the election of the company’s board of directors; • presentation of the company’s financial statements and the report of the company’s auditors on the financial statements; and • the appointment of the company auditor. A “special meeting” is a meeting called for the purpose of conducting business other than the foregoing – eg, a meeting requisitioned by an activist shareholder. Although shareholders of Canadian public com - panies are entitled to attend AGMs in person, they more commonly vote by proxy. Since the COVID-19 pandemic, it has become increasingly common for shareholder meetings in Canada to be held virtually. As such, several Canadian corporations’ statutes have been amended to expressly address virtual meetings as well as to impose rules companies must satisfy in conducting such meetings. Guidance has also been issued by Canadian securities regulators regarding their expectations for virtual meetings held by Canadian public companies. More recently, several shareholder proposals have related to returning to in- person annual shareholder meetings, with an option to attend virtually, and have received strong shareholder support. Where a matter to be addressed at a shareholders’ meeting is subject to a shareholder vote, the matter must be comprehensively described in a management information circular made available to shareholders in advance of the meeting. This circular must include,
among other things, the recommendation of the com - pany’s board regarding the matter. For example, where a Canadian public company has negotiated a change of control transaction whereby it is to be acquired, the company will send proxy materials to shareholders and a meeting circular containing the board’s recom - mendation in advance of a meeting called for share - holders to vote on the transaction. 4.4 Shareholder Claims Canadian corporate law provides for three main vari - eties of shareholder claims. These are (i) a personal action, (ii) a derivative action, and (iii) an oppression claim. Personal Action A personal action seeks to enforce rights personal to the shareholder. One instance in which personal actions are more common is in the context of a share - holder activist campaign. For example, the activist may seek a court order compelling the requisition - ing of a shareholder meeting where the company has refused to act. Similarly, an activist can resort to court action to challenge the company’s invocation of its advance notice by-laws amid a proxy contest and the activist’s attempted nomination of a dissident slate of directors. Other examples of rights personal to a shareholder include the right to vote, the right to timely and informative notice of meetings, and the right to inspect the company’s books and records. Derivative Action A derivative action is where the shareholder seeks to pursue a claim not in its own name but on behalf of the company. The classic example of a derivative action is a claim against the company’s directors for breach of their fiduciary duties. To bring a derivative action, the shareholder must first obtain the court’s approval. This generally requires satisfying three con - ditions. First, that the shareholder must have given at least 14 days’ notice to the company of its intent to bring the derivative action if the company does not bring the applicable claim itself. Second, the share - holder must convince the court that it is acting in good faith in bringing the claim. Third, the shareholder must convince the court that its proposed claim is in the company’s best interests.
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