CANADA Law and Practice Contributed by: Sarah Gingrich, Sean Stevens, Marie-Josée Neveu and Tracy Hooey, Fasken
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 con - ducting such meetings. Guidance has also been issued by Canadian securities regulators regard - ing their expectations for virtual meetings held by Canadian public companies. Most recently, several shareholder proposals have related to returning to in-person annual shareholder meet - ings, with an option to attend virtually, and have received majority support. Where a matter to be addressed at a sharehold - ers’ meeting is subject to a shareholder vote, the matter must be comprehensively described in a management information circular made avail - able to shareholders in advance of the meet - ing. This circular must include, among other things, the recommendation of the company’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 to shareholders proxy materials and a meeting circular contain - ing the board’s recommendation in advance of a meeting called for shareholders to vote on the transaction. 5.4 Shareholder Claims Canadian corporate law provides for three main varieties of shareholder claims. These are (i) a personal action, (ii) a derivative action, and (iii) an oppression claim. A personal action seeks to enforce rights per - sonal to the shareholder. One instance in which personal actions are more common is in the context of a shareholder activist campaign. For
example, the activist may seek a court order compelling the requisitioning 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 com - pany’s books and records. 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 exam - ple of a derivative action is a claim against the company’s directors for breach of their fiduciary duties. To bring a derivative action, the share - holder must first obtain the court’s approval. This generally requires satisfying three conditions. 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. Sec - ond, the shareholder 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. An oppression claim is unique to Canadian cor - porate law and is a broad and potentially pow - erful statutory remedy, including as it grants the court wide discretion in devising any resulting relief. In brief, an oppression claim enables shareholders – as well as other security holders, creditors, directors or officers – to seek judicial intervention where they believe the company (or its directors or officers) have acted in a manner that is oppressive or unfairly prejudicial or that unfairly disregards the claimant’s interests. Con -
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