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Data as of December 31, 2017

“Shareholder activism in Canada is primarily focused on small- and nano-cap companies usually in the resources sector, however, activists have also found opportunities in the real estate sector.”

Jay Frankl, Senior Managing Director

Country:
Canada

Country: Canada

Average % of insider ownership:

2.79

Activism
Threat Level


To learn more about this country, please click on the tabs below

  1. Country Summary
  2. Disclosure
  3. Shareholder Rights
  4. Company Defense

Canada’s regulatory environment is more activist-friendly than the U.S., however, since the rebound in commodity prices – a significant boost for Canadian capital markets – management teams have generally held more power in combatting activist campaigns. This led to a decrease in proxy contests in both 2016 and 2017. As such, Canada has moved down in FTI’s Threat Level analysis behind the U.K., Australia, and the U.S.

Shareholders must disclose a press release and warning report, upon acquiring ten percent or more of an outstanding class of shares within two business days; additional disclosure is required when adding two percent to the ownership above.

Like the U.S., Canadian regulations allow for looser 13G type disclosure when an investor does not intend to influence the strategic direction of the company.

Shareholders who own just five percent of voting equity can requisition a shareholder meeting, except for in Quebec where the threshold is ten percent.

Uniquely, Canada offers what is known as the “oppression remedy” which entitles the court to enforce a breach of fiduciary duty from the Board. Actions may include awarding damages, transaction review, or calling a special meeting.

Exemptions available to activist investors include “15 or fewer”, which allows for solicitation of up to 15 shareholders and the ability to publicly broadcast their campaign.

The proxy solicitation rules in Canada are highly technical, can vary by jurisdiction and are a common subject of litigation in contentious activism campaigns.

Canadian companies have very few corporate defense options, which makes Canada attractive to activists. For example, shareholders vote annually on all directors. This permits the full board to be removed in one voting period.

Basic defenses such as advance notice by-laws and proxy cut-off times are becoming more common.

Although forum selection by-laws are not common, newly-IPOed companies are increasingly adopting them. A small number of Canadian companies also boast enhanced quorum provisions.


Top Campaigns by Type

1. Removal of CEO or Other Board Member
2. Gain Board Representation
3. Remuneration

Campaigns By Year

Total
Campaigns

446

Notable Invested Activists

• FrontFour Capital Group
• Marcato Capital Management
• Sachem Head Capital Management

Recent activism campaigns

Element Fleet Management Corp.
VS.
 Sachem Head Capital Management
Hudson's Bay Company
VS.
 Land and Buildings
Shopify Inc.
VS.
 Citron Research

Total Active
Campaigns

35

Contact FTI Consulting

Jay Frankl

Head of Activism and M&A Solutions
Senior Managing Director
+1 (202) 312 9216
Jason.Frankl@fticonsulting.com

Geoff Serednesky

Capital Markets Research and Activist Engagement
Managing Director
+1 312 861 4721
Geoff.Serednesky@FTIConsulting.com