Ontario Courts Provide Guidance On Proxy Contest Issues

Two recent Ontario Superior Court decisions provide important guidance on key issues commonly arising in proxy contests. In addition to the specific guidance provided, the decisions indicate that:

• Ontario courts are taking a practical, purposive approach to the interpretation of the statutory rules governing proxy contests; and
• dissident shareholders must discharge a significant burden to challenge actions taken by corporations in responding to dissident activity.

Additionally, the two decisions are themselves indicative of a trend of increased incidence of shareholder activism, and the use of the courts to resolve disputes arising from shareholder activist activity.

Smoothwater Capital Partners LP I v. Equity Financial Holdings Inc.