DEFENSIVE TACTICS DURING A PROXY CONTEST: Lessons From The Oremex Saga

There are important lessons in a recent Ontario Superior Court decision examining defensive tactics taken by a board in the context of a contested shareholders' meeting.

In Concept Capital Management Ltd. v. Oremex Silver Inc., 2013 ONSC 7820, the board of Oremex – during a contested election — postponed a shareholders' meeting and issued shares to a third party, GRIT, in a financing transaction that closed in escrow on the same date as the revised record date for the meeting. Oremex took the view that the new shares could be voted at the contested meeting.

There were two principal issues before the court.

Was the Oremex Board's Postponement of the Shareholders' Meeting Valid? Yes