BC Court Leaves "Empty Voting" To Legislators And Regulators

In TELUS Corporation v. Mason Capital Management LLC, the British Columbia Court of Appeal has overturned an important ruling of the British Columbia Supreme Court, widely lauded for articulating concerns regarding "empty voting". The Court of Appeal acknowledged that empty voting is a concern, but emphasized that this concern must be dealt with through regulatory or legislative change. The Court of Appeal also affirmed the right of CDS to bring corporate actions on behalf of underlying beneficial shareholders in British Colombia.

Generally, the economic interests of shareholders as equity holders are aligned with those of a corporation, and shareholders are expected to vote according to those aligned interests. Empty voting can occur in a variety of ways, but in each case represents the separation of a shareholder's ability to vote on the affairs of a corporation from the underlying economic interest in the value of the shares.