Being Prepared for a Stealth Proxy Contest

With shareholder activism rising in Canada over recent years, the number of publicly waged proxy contests has dramatically increased - from two in 2004 to nineteen in 2009. This trend is expected to continue in 2010, as evidenced by recent contests involving Lions Gate Entertainment Corp. and Crew Gold Corporation.

But managers of Canadian small- and mid-cap issuers should be cautioned that these high-profile public proxy fights, where dissidents seek broad shareholder support through a public solicitation of proxies and management has the luxury of responding to the dissidents' campaign, are in the minority. A greater number of "stealth" proxy contests occur each year in Canada where incumbent management is often taken by surprise.