Last week, Quebec took an important step towards the modernization of its business legislation with the introduction of Bill 63 (the Bill) into the Quebec National Assembly under the title Business Corporations Act.
Of significant interest to shareholders of public companies governed by the Province’s existing statute are new rights to participate in corporate affairs. The key right to file a shareholder proposal, not included in the current legislation, is set out in the Bill.
As in the corporations acts of other Canadian jurisdictions, including the federal Business Corporations Act, most specific filing requirements will be subsequently spelled out in regulations, but passage of the Bill will set the table for shareholders to put issues of concern to them on the proxy ballot for a vote of their peers.
Some of the provisions common to other modernized Canadian corporations acts are:
- shareholders may file proposals if they are beneficial owners (mutual funds and pension plans are beneficial owners of shares and other securities);
- a required minimum value of shares and holding period are to be fixed by regulation, and the shares must be held until the company’s meeting at which the proposal goes to a vote;
- the proposal and any supporting statement will be subject to a limit on the number of words used; and
- a proposal may include nominations for the election of directors if the proposal is submitted by one or more shareholders representing not less than 5% of the shares.
Other elements of the Bill’s shareholder proposal provisions are unique in Canada:
- a limit on the number of proposals “presented by a person for a meeting” is to be established by regulations;
- the shareholder submitting the proposal is not required to purchase more shares if the market value of its holdings falls below the dollar amount that is required for the initial filling;
- at the meeting, the person presenting the proposal must be allowed to “speak in respect of [it] for a reasonable period of time.”
These are all provisions that indicate that the Quebec government has paid close attention to issues that have arisen in the proposal filing process, and demonstrate a legislative intention to get more involved in setting the terms of proxy ballot engagement between shareholders and the companies in which they invest.
By Laura O’Neill, Director of Law and Policy