Alberta Court Issues Reminder re: Disallowance of Proxies

In Paquette v Zaio Corporation, the applicants held almost 40% of the 10% secured convertible debentures (the "Debentures") issued by the respondent, Zaio Corporation ("Zaio"). The Debentures ranked as first secured debt and StableView Asset Management Inc. ("StableView") held subordinate debentures and ranked as second secured debt.

In 2016, the Board of Zaio prepared a debt reduction strategy which included an effort to convert the Debentures into common shares before they matured. In furtherance of the strategy, Zaio and StableView entered into a "quid pro quo" agreement wherein StableView agreed to contact current security holders of Zaio to try to obtain their agreement to convert or extinguish their securities. In exchange, StableView would receive one Zaio common share for each 10 shares underlying the successfully converted or extinguished securities. An additional benefit to StableView was that if the Debentures were converted into shares, the StableView