On November 5, 2024, Donald Trump secured a decisive victory in the U.S. presidential election. In response, markets surged, while activists watched closely as companies and investors alike prepared for uncertainty and braced against the threat of “America First” tariffs, implications of renewed tax cuts and deregulation.

It is against this backdrop that we examined complex M&A, shareholder activism and corporate governance issues in our latest webinar, hosted by Walied Soliman, KC and Orestes Pasparakis, Co-chairs of our Special Situations Team in Toronto, and their special guest, Kai Liekefett, Co-Chair of the Shareholder Activism and Corporate Defense practice at Sidley Austin LLP in New York. During the webinar they discussed the expected impacts of Trump’s election win on activism while canvassing important developments and lessons that emerged from the 2024 proxy season.

Let’s recap the key takeaways and look ahead to what’s coming.

Proxy contest activity rose to a new record high in 2024

Economic uncertainty in 2024 contributed to another record year for proxy contests in Canada, as activists initiated 76 campaigns across 55 different Canadian companies, surpassing the previous record of 69 campaigns set in 2023. Board-related challenges, such as where activists proposed a competing slate of director nominees, made up the bulk of proxy contests in 2024.

In the US, activism levels remained high through Q3 2024, although activity has cooled relative to the post-pandemic surge seen in 2022. Board-related campaigns have tracked below the levels seen in the 2021–2022 period, though dissidents continue to agree to formal settlements in over half of such campaigns.

Corporate governance trends

Canada saw a significant rise in shareholder proposals in 2024, with 78 proposals filed across 32 companies. However, support for ESG-related proposals has continued its decline from 2021 highs. Average investor support for DEI, climate and human rights proposals has declined, attributable to strong pushback from certain groups against the consideration of certain environmental and social matters.

Consumers and politically-driven activists other than shareholders may also exert significant influence on companies from beyond the legal arena. This is demonstrated in the recent “anti-woke” activism campaigns launched by Robby Starbuck against several large American companies, which resulted in the companies caving under immense pressure and reversing their DEI policies. This populist drive has been spurred by what Starbuck described in a media interview as, “a referendum on wokeness,” prompted, in part, by an anticipated second Trump administration.

We also saw mixed progress in Canadian board diversity in 2024. Average gender diversity across boards decreased in 2024 to 29%, down from 32% the previous year. There was no increase in the number of women in board chair and CEO roles; however, all-male senior management teams have continued to decline.

2024 shareholder activism case studies

Aimia Inc. The dispute involving Aimia Inc. and Mithaq Capital SPC yielded lessons related to hostile take-over bids and private placements. In 2023, while Aimia was in the process of closing a private placement, Mithaq increased its stake in Aimia and launched a hostile take-over bid. Before the bid expired in early 2024, Aimia applied to the Ontario Capital Markets Tribunal for relief, arguing that Mithaq failed to comply with applicable hostile take-over bid rules with respect to its acquisitions a year earlier. However, the Tribunal could not provide an adequate remedy as it found that too much time had elapsed following the occurrence of the impugned conduct. The Tribunal was not prepared to make Mithaq offer to buy Aimia shares at a price based on the share price from a year earlier, as may have been required under the rules, when the impugned conduct occurred. The Aimia case should remind companies to act expeditiously to enforce their rights as soon as they learn of an activist’s suspected breach of applicable securities laws.

Meanwhile, Aimia’s private placement received approval from both the Tribunal and the TSX. The Tribunal found that Aimia had a legitimate need for capital and ratified the private placement. Therefore, private placements with proper purpose will not be seen as improper defensive tactics by securities regulators.

Gildan Activewear Inc. The Gildan case also produced valuable takeaways. The dispute at Gildan arose from conflicting visions regarding succession planning between the company and its co-founder and CEO of over 20 years, Glenn Chamandy. Shortly after Gildan announced its new CEO, several Gildan shareholders launched a campaign to reinstate Mr. Chamandy in a unique case of activists attempting to maintain the status quo. The Gildan board ultimately resigned ahead of its May 2024 shareholders’ meeting, where the dissident slate, including Chamandy, was elected.

Gildan is a reminder of the importance of proactive and purposive shareholder engagement.

Riot Platforms, Inc. v Bitfarms Ltd. Lastly, in Riot Platforms, Inc. v Bitfarms Ltd., 2024 ONCMT 27, the Ontario Capital Markets Tribunal cease traded a shareholder rights plan (known as a “poison pill”) that contained a trigger below the customary 20% threshold, which is the threshold for Canada’s formal take-over bid regime, after reaching which an offer must be made to all shareholders of the class subject to the bid unless an exemption is available. In its reasons, the Tribunal clarified the test for cease trading tactical rights plans not alleged to have contravened Ontario securities laws under section 127(1) of the Securities Act (Ontario). To challenge a tactical rights plan, an applicant must now show that the rights plan undermines, in a real and substantial way, and with public effect, an animating principle underlying Ontario’s take-over bid regime.

Although the decision does not foreclose the possibility that a shareholder rights plan could be allowed to remain in effect with a threshold of less than 20%, the Tribunal has clarified that this could only occur in “exceptional circumstances.”

Key legislative developments

In October 2024, the federal government proposed amendments to the Canada Business Corporations Act (CBCA) that will introduce mandatory climate-related disclosures for large CBCA private companies and deliver “made-in-Canada sustainable investment guidelines” with the aim of accelerating progress toward net-zero emissions by 2050. The amendments came after the recent changes to the Competition Act came into force in June 2024 which target climate and other environmental-related claims by businesses that are not made in accordance with “internationally recognized methodology”.

However, with a federal election looming in Canada, it is unclear whether the proposed CBCA amendments would survive a potential change in government, especially given the more climate-skeptical attitudes prevalent among many members of Trump’s incoming administration.

Trump 2.0: Looking ahead to 2025

A second Trump presidency promises to intensify shareholder activism in 2025 and beyond. The capital markets rallied following the news of Trump’s re-election, and Trump’s proposed extension of the tax cuts he instituted in his first term and his proposed campaign of deregulation have been generally well received by American businesses.

In particular, a more laissez-faire approach to anti-trust enforcement in the United States under the new Trump administration is expected to fuel activism. This is because M&A is the activist’s primary vehicle for monetizing investments. With a more liquid M&A market unhindered by the more aggressive merger control that prevailed under President Biden, activists will enjoy a richer supply of exit opportunities.

The turbulence that will result should Trump make good on his threatened tariffs on Canadian exports may present further opportunities for activists. For example, activists may put pressure on Canadian businesses to take steps to mitigate the potential impacts of tariff measures, including acquiring or merging with a U.S.-based competitor and moving manufacturing capabilities south of the border.

Companies may take certain other steps in anticipation of such tariffs, such as analyzing their supply chains to understand the origins of their inputs and pinpointing vulnerabilities. Further, exporting firms can identify alternative markets for their products, while importers can seek to identify alternative suppliers. To offset the impacts of a potential trade war with the US, Canadian exporters may also fast-track shipments of inventory across the border ahead of President-elect Donald Trump’s inauguration on January 20, 2025.

Nonetheless, companies beware: activists thrive wherever volatility and uncertainty prevail and will be closely monitoring the market for businesses that are struggling to adapt to the new economic landscape.

For more key insights and in-depth analysis, watch our webinar on demand.