Topic: Shareholder Activism

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Re Hemostemix Inc: Alberta Securities Commission upholds decision of TSXV in contested private placement

Following recent amendments to Canada’s takeover bid rules, private placements in the face of hostile bids have become newly controversial. Private placements in the context of proxy contests have received less attention. Yet this is somewhat surprising, because they are another facet of the same underlying question: whether regulators should allow a financing that may significantly affect the voting power of hostile shareholders in an ongoing shareholder persuasion campaign.

The Alberta Securities Commission (ASC) has just released its reasons for upholding the TSXV’s allowance of a private placement in the context of a proxy contest, without requiring shareholder … Continue Reading

Institutional investors managing US $17 trillion announce new corporate governance framework

In a move likely to have significant impacts on corporate governance, a group of institutional investors managing upwards of US $17 trillion has announced the formation of the Investor Stewardship Group (the Group). The Group has adopted a framework of certain non-binding investor-friendly principles, many of which are either common or already legally recognized in Canada, illustrating one of Canada’s greatest attractions as an investment destination: its strong protections of investor rights. On the other hand, the Group takes a skeptical view of a common practice in Canada: dual-class share structures.

The Group

The Group is a collective of … Continue Reading

An age of shareholder empowerment

In a corporate directors survey (the Survey) entitled “The swinging pendulum: Board governance in the age of shareholder empowerment”, PricewaterhouseCoopers LLP (PwC) presents current trends in investor influence and their impact on governance practices of boards and management teams.

Conducted amongst 884 company directors in the summer of 2016 with respondents representing over 24 industries, the Survey highlights the increasing influence of investors and board sentiment in this “new age of shareholder empowerment”.

Board composition

When recruiting new board members, investor recommendations appear to carry increasing weight. The Survey notes that there has been an … Continue Reading

Tactical defenses by targets: OSC and BCSC defer to target board decision to implement private placement in face of hostile bid

Further to our post on the Dolly Varden Silver Corp. (Dolly Varden) and Hecla Mining Co. (Hecla) decision, the Ontario and British Columbia Securities Commissions (the Commissions) recently released their reasons for their decision in July, 2016 (the Reasons) allowing Dolly Varden to proceed with a proposed private placement announced shortly after Hecla launched a hostile bid for Dolly Varden.  Following the decision, Hecla promptly withdrew its bid.

The Dolly Varden bid has been closely watched because it is the first decision to consider the use of a private placement by a target since … Continue Reading

Placeholder board nominees: A new tactic in the activist tool-kit?

In response to the threat of a shareholder ambush of director nominations at a shareholder meeting, many Canadian companies have adopted advance notice provisions (ANPs). ANPs require that shareholders inform a company by a certain deadline if they wish to nominate directors to the board. For annual shareholder meetings, this deadline is typically no less than 30 days in advance of the meeting. For special meetings, it is typically no less than 15 days after the announcement of the meeting. Norton Rose Fulbright’s Special Situations team has been at the forefront of this development, having been involved in … Continue Reading

Trends and predictions in Canadian proxy contests

Kingsdale Shareholder Services (Kingsdale) recently released its annual Proxy Season Review. As in previous years, the report discusses trends observed in 2016 and offers predictions of what we might see looking forward. The report also outlines strategic recommendations for Canadian companies.

Trends from 2016

Contested Activity “Back to Earth”: After a record setting year in 2015, Kingsdale reports that activist activity has returned to its pre-2015 levels, which had been fairly consistent for about five years. Kingsdale attributes this reduction to strong share performance, increased adoption of defence tactics by vulnerable companies, and political and economic … Continue Reading

Federal government proposes changes to corporate law: What it means for corporate governance and shareholder activism

On September 28, 2016, Canada’s federal government introduced a bill proposing amendments (the Amendments) to the Canada Business Corporations Act (the CBCA), among other acts. The Amendments include new requirements for electing directors, mandatory diversity disclosure, and changes to shareholder communications. These proposed changes, if enacted, will have significant effects on corporate governance and shareholder activism in Canada. Here are some of the key things issuers and investors will need to know.

 Election of directors

 The Amendments introduce several changes to the election of directors. They will require publicly traded corporations, with some prescribed exceptions, to:

  • hold
Continue Reading

Norton Rose Fulbright’s Canadian Special Situations Team ranks in the top 10 of global legal advisors for shareholder activist campaigns

Global law firm Norton Rose Fulbright’s Canadian Special Situations Team has ranked in the top 10 of global legal advisors advising both companies and activists in shareholder activist campaigns and is the only Canadian firm to be represented on the global ranking. The Special Situations Team also advised on the only Canadian campaign to rank in the top 15 global campaigns by target market cap, ranking 5th.

To view the Global Shareholder Activism Scorecard, please click here.

Stay connected with Special Situations Law and subscribe to the blog today.Continue Reading

Activists increase their focus on smaller issuers

Shareholder activism is often associated with campaigns involving large, high-profile issuers. Yet as the Financial Times reports in a recent article, referencing global data from Activist Insight, there has been a slight upswing this year in activism against relatively small issuers.

The data show that from the start of year to the end of July, 61 “micro-cap” companies—that is, companies with market capitalizations ranging from USD $50m to USD $250m—have been targeted by activist funds. 56 micro-cap issuers were targeted over the same period in 2015. In contrast, activism against the largest issuers has experienced a slight slowdown, with 16 … Continue Reading

Policy activists get tough on climate change

As we previously predicted in a 2014 article, The Rise of Policy Activists?, policy activism in Canada is gaining speed. In this year’s upcoming proxy season, a hot topic for policy activists is the potential transition to a global low-carbon economy.

Canada is currently working towards a national climate change plan and one of the tools being considered is a national carbon tax. If implemented, energy companies would be required to pay a national tax on greenhouse gas emissions.

One of Suncor’s shareholders, NEI Investments, filed a shareholder proposal last month demanding that Suncor address its long-term survival … Continue Reading

Emerging trends: Activist shareholder bans

As a result of the rising tide of shareholder activism in Canada, a number of defensive tactics have been developed by corporate management. The newest innovation in management’s arsenal is the activist investor ban—an agreement between an issuer and a purchaser that restricts the purchaser from transferring its shares to activist investors.

Activist investor bans have recently become the norm in the realm of pharmaceutical mergers and acquisitions. Last month, for example, the Canadian drug maker Concordia Healthcare Corp. agreed to issue a 14% equity stake to a private equity firm, but not before putting an activist investor ban … Continue Reading

Beyond Governance – A Canadian perspective on pre-empting activism through shareholder value creation

In collaboration with The Boston Consulting Group and RBC Capital Markets, our Canadian Special Situations Team has released a paper offering a fresh perspective on defensive strategies addressing the spectre of shareholder activism. The paper argues that in developing a sound defense, good governance practices are vital, but should not be relied upon as a company’s sole fortification. The most effective defense is to create sustainable shareholder value. This value creation should be facilitated not by enhancements in oversights, controls and disclosure, but rather through a board’s more active engagement with management, strengthened by a more fulsome understanding of the … Continue Reading

Multiple activist campaigns on the rise as activists outnumber target companies

A corollary to the trend of rising shareholder activism is the increasing frequency with which target companies are facing multiple activist campaigns. Companies that have successfully defended activist campaigns in the past are not free to rest on their laurels – if the same issues persist, future attacks may be on the horizon.

The Wall Street Journal reports that 39 companies have dealt with more than one shareholder activist over the past year – a 95% increase since 2011. Companies that are underperforming seem to be a breeding ground for multiple shareholder activist activity, but there do not seem to … Continue Reading

Shareholder activism on the rise

According to recent studies, the rate of successful shareholder activism is on the rise. While historically high when compared to the relative ownership percentage of those campaigning, new data from North America and Europe demonstrates a climbing success rate for activist campaigns.

Studies that measure shareholder activism often organize their success-rate analysis by either a success-per-shareholder-demand variable, which measures the amount of successful changes to a company against the amount of total activist demands, or based on overall “engagement outcomes”,[1] which measure success against the amount of total activist campaigns (which may contain multiple demands).   Both indicators attempt to … Continue Reading

Hedge fund activism: The importance of preparation

Boy Scouts know it and today’s boards and executive officers know it too: be prepared. In a recent article by Martin Lipton, Mr. Lipton makes it clear that advance preparation may be the key to successfully dealing with an attack from an activist hedge fund.[1]

Dealing with hedge fund activism appears to be the new normal for companies, even the successful ones, and all companies should consider preparing an activist defense strategy. Trevor Zeyl discusses the increase in hedge fund activism in his recent post and outlines certain trends, including “wolf packs”, that have contributed to hedge fund activist … Continue Reading

Remembering the legendary Kirk Kerkorian

In yesterday’s Financial Post,  Walied Soliman, a partner and co-chair of Norton Rose Fulbright’s Special Situations Team, reflected upon the contributions of Kirk Kerkorian, a pioneer of activist investment, stating that Kerkorian was “one of the originals who inspired many to create this asset class. We tip our hats to him.”

The full Financial Post article can be accessed here.

Stay connected with Special Situations Law and subscribe to the blog today.

 … Continue Reading

M&A Activism 101: Top 3 Tips for Companies

There is a wide range of issues that a board and management team must face in considering an M&A transaction in the normal course.

Increasingly however, a company that is considering a potential merger or acquisition, or asking its shareholders to consider such a transaction, needs to be aware of the motivations of the stakeholder community that will also be evaluating the prospects of any such transaction, whether at a shareholder meeting or in the court of public opinion.

Stakeholders who do not like the merits of a transaction that is being proposed are increasingly actively and publicly campaigning against … Continue Reading

Shareholder engagement: A strategic opportunity

Shareholder engagement is a key tool in a board’s toolkit to prepare for and respond to potential activist investor campaigns.  A shareholder engagement program can provide valuable information on investor opinion, allow the board to head off issues before they become the subject of an activist campaign, and cement the support of important long-term investors.

Based on dialogue with institutional investors, investor associations and advisors, the EY Center for Board Matters reports that most investors believe that whether activism is beneficial over the long term depends on the particular circumstances.  Many investors stressed that in an activist situation, they talk … Continue Reading

Shareholder activism goes mainstream: investment giants increasingly focused on corporate governance

The Wall Street Journal reports that Vanguard Group, the largest mutual fund firm in the U.S., and BlackRock Inc., the world’s largest asset manager, are becoming more assertive in exercising their influence over companies in which they invest. This is a significant development, given Vanguard and Blackrock’s immense shareholdings in large American companies.

BlackRock’s recently revised its U.S. voting guidelines, which now indicate that the company may oppose a director’s re-election over concerns such as insufficient board diversity, inappropriately lengthy tenures, and poor attendance, even over short periods.

A recent letter from Vanguard CEO F. William McNabb III sent to … Continue Reading

New brand of shareholder activism targets GM

When most people think shareholder activism, they think big names and big hedge funds – Carl Icahn, Bill Ackman, Jana Partners – who have the wherewithal to obtain a sizeable stake in the target company. However, as explored by Ronald Barusch in the Wall Street Journal, a new form of activism, spearheaded by a former Obama aide, Harry J. Wilson, has shown that you don’t need to carry a big stick (or have a major stake in the target company) to have clout as an activist.

In a February 9, 2015 notice to General Motors, Wilson put the … Continue Reading

Our Top Five Tips for Companies and Boards in advance of the 2015 Proxy Season

As a new year begins, it is always a good time to take stock of the successes of the past year and look forward to doing even better in 2015. Shareholder activism will continue to be a “hot topic” for publicly listed issuers in 2015. Here is a checklist of our top five tips to help ensure a smooth year to come:

1.            Have an Effective Communication Strategy – Having a great corporate strategy that no one knows about will not help your business. Whatever the industry, it is important that internal and external stakeholders are regularly kept informed … Continue Reading

Shareholder activism: A year in review – Cutting-edge tactics in 2014 and a look ahead

Walied Soliman and Orestes Pasparakis, co-chairs of Norton Rose Fulbright’s Special Situations Team, will be joined by Wes Hall, CEO, Kingsdale Shareholder Services Inc. to host our annual video webinar “Shareholder Activism: A Year in Review – Cutting-edge Tactics in 2014 and a Look Ahead” on Wednesday, February 4, 2015 from 12:00-1:00 pm EST.

On the heels of one of the busiest years in shareholder activism in Canada, we will highlight the key developments of 2014 and what to expect for 2015. Our speakers will update you on everything you need to know to be current on shareholder … Continue Reading

Institutional investors strongly support shareholder activism, according to new study

Institutional investors represent perhaps the most important segment of shareholders that both management and dissidents must appeal to in the course of an activist campaign.

A new study of institutional investors published by FTI Consulting, Inc. (the Study), a leading US-based corporate consultancy firm, reveals interesting findings about the attitudes of such investors toward shareholder activism.  The Study, which surveyed over 100 institutional investors representing $1.7 trillion in assets, shows that institutions have become increasingly engaged in their portfolio companies and more supportive of activist shareholders.

A strong majority of institutional investors now view shareholder activism positively, with 76% … Continue Reading

Outlook in oil and gas: Increasing shareholder activism in 2015

Industry professionals envision an increase in shareholder activism in light of falling prices and growing activist investor successes.

Chad Brownstein, CEO of Rocky Mountain Resources, commented on CNBC’s “Closing Bell” that “[w]hat you’re going to see in the market in 2015 is an immense amount of activists turning their guns toward oil companies.”  Brownstein noted that smaller oil companies in particular will face increasing vulnerability to hedge fund activism with pushes for consolidation, asset sales and management changes at the top of the activist agenda.

Ernst and Young’s most recent bi-annual “Oil and Gas: Capital Confidence Barometer” (the E&Y Report) … Continue Reading

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