ESG & Shareholder Activism: Ready or Not, Here it Comes

Hands passing around business document at table“ESG” stands for Environment, Social and Governance and describes a handful of criteria used by both issuers and investors to focus on a corporation’s impact and activity regarding topics like environmental protection, climate change, support for the local and global community, diversity in hiring and advancement, and employee compensation.

This investment methodology, once considered novel, has moved into the mainstream. Institutional investors in particular have been vocal in expressing their belief that maximizing returns to shareholders can no longer be a corporation’s only goal, and are increasingly focused on evaluating company performance against ESG key performance indicators in order to … Continue Reading

Social Media and the Retail Investor: A Regulator’s Dilemma

Cellphone in hands with fingerprint ID lock screenWith the growing accessibility of “do-it-yourself” investment technology, it should come as no surprise that retail investing has been on the rise. In fact, the Ontario Securities Commission (OSC) recently published a study (the Study) which reveals that there has been a sharp increase in retail investing since 2015, and especially since the onset of the COVID-19 pandemic. The Study also reveals that a significant number of retail investors rely on information that they find on social media to inform their investment decisions.

Retail investors’ decisions can have major impacts on capital markets. In early 2021, for … Continue Reading

A Recap of the OSC Decision on the Minimum Tender Requirement under the New Canadian Takeover Bid Regime

Two people discussing a contract, one person signing itOn February 23, 2021, the Ontario Securities Commission (OSC) released its reasons in ESW Capital, LLC, 2021 ONSEC 7 (the ESW Decision), in which the OSC considered the availability of an exemption from the minimum tender requirement for takeover bids. The ESW Decision dismissed the proposed bidder’s application for exemptive relief, but provided important clarifications on the analytical framework applicable to this type of application.

The 2016 Changes to the Canadian Takeover Bid Regime

In 2016, the Canadian Securities Administrators (CSA) made sweeping changes to the takeover bid process which are reflected in National … Continue Reading

Climate Change and the Need for Sound Corporate Governance

People sitting around meeting table, papers and laptop on tableThe United Nations’ Intergovernmental Panel on Climate Change recently released a troubling report, highlighting the irreversible consequences of climate change on humanity. This study is simply adding to the pressures set forth by governments and other entities such as the Task Force on Climate Change-Related Financial Disclosure (TFCD) and BlackRock to hold corporations more responsible for their ecological footprint. Public issuers must be attentive to such environmental concerns as sound environmental practices, strong corporate governance relating to environmental matters, and accountability regarding environmental footprints are each well-recognized trends becoming more prevalent for companies and their respective shareholders. These … Continue Reading

SPACtivism: A New Trend Looming in Shareholder Activism

Finger pointing to bar graph on screen

The past 18 months have seen a number of developments in North American capital markets, with trends such as the rise of meme stocks and the self-proclaimed retail investor revolution dominating many headlines. Another interesting, if less novel, trend that emerged in 2020 was a resurgence of special purpose acquisition corporations (“SPACs”). In 2020, more than half of all initial public offerings (“IPOs”) in the U.S. were SPACs, and the pace of U.S. SPAC IPOs doesn’t seem to be slowing down in 2021; as of this writing, there have been a reported 412 SPAC IPOs … Continue Reading

CP Rail Supports an ESG-Related Shareholder Proposal Which Includes Annual Advisory Vote by Shareholders on a Climate Action Plan

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TCI Fund Management Limited (TCI) recently successfully submitted a climate change-related shareholder proposal (the Proposal) to Canadian Pacific Railway Limited (CP) to be voted on at CP’s upcoming 2021 annual general meeting of shareholders.  As stated in its circular for the meeting, CP supports TCI’s Proposal and recommends shareholders vote in favour of it.  Of particular note is that the Proposal, if passed, requires CP to hold a non-binding shareholder advisory vote on an annual basis regarding its climate action plan.

Takeaway

The Proposal, which is the latest in a growing trend of shareholder proposals … Continue Reading

A Dive into the Surge of Cannabis-Related Securities Class Actions

Indoor growing room of cannabis plantsAfter nearly two years since the recreational cannabis industry has been in operation, we are seeing a rise in securities class actions and regulatory activity relating to cannabis companies. Since legalization, the growth of the sector has been fast and furious. The initial excitement and high investor interest has been recently overshadowed by compliance breaches at Canadian cannabis issuers coupled with market volatility fueling event-based securities litigation.

A surge of securities class actions were filed on behalf of disgruntled investors in 2019 against a number of Canadian cannabis issuers for prospectus and secondary market misrepresentation. NERA Economic Consulting released a … Continue Reading

A Review of 2020: A Catalyst for Corporate Governance Change

Looking through venetian blinds into boardroom, five people are having a meeting

The COVID-19 pandemic coupled with the fight against anti-Black systemic racism has had a significant and potentially long-lasting impact on corporate governance.

In its report entitled “The New Abnormal: How 2020 Has Changed the Future of Corporate Governance” (the Report), Kingsdale Advisors (Kingsdale) notes that directors have faced a string of challenges in 2020 that have required innovative and agile leadership. The Report analyzes some key corporate governance trends, including the following:

  • Investors have higher expectations regarding Environmental, Social & Governance (ESG) disclosure. Institutional investors in particular are pushing for enhanced ESG-related disclosure and expect issuers
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Dialing In: Adapting to Virtual Shareholder Meetings

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The Shift to a Virtual World

The COVID-19 pandemic has altered and changed many familiar corporate operational and governance practices and norms, including how issuers host their annual general meetings (AGMs). Broadridge Financial Solutions reported hosting 300 virtual meetings in 2019 and approximately 1500 virtual meetings this year thus far.

In place of in-person only AGMs, issuers have two options: (1) hybrid AGMs that provide both virtual and physical meeting platform options and (2) virtual-only AGMs implemented through electronic means such as the use of live webcasts and teleconference lines. Virtual-only AGMs have proven to be the most … Continue Reading

Global Trends in Shareholder Activism Amidst COVID-19

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According to a review of shareholder activism by Lazard (the Lazard Review) that examined global activism trends in the first half of 2020 (H1 2020), economic uncertainty brought on by the COVID-19 pandemic, coupled with heightened awareness of widening socioeconomic inequalities around the world, has altered shareholder activism activity globally. We highlight some important trends to watch as companies and shareholders continue into the second half of 2020.

Resurgence of Poison Pills

As stock prices plummeted in March, many U.S. companies moved quickly to adopt poison pills (also known as shareholder rights plans). A recent study found … Continue Reading

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