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SIO appeals for help in pressuring the federal government to end discriminatory shareholder legislation
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Proposed changes to federal corporate legislation continue to discriminate against shareholders wishing to raise social and environmental issues with management, says the Social Investment Organization. As a result, the SIO is asking its members and supporters to step up their letters and faxes on the issue. “We need our members to show the Senators reviewing this Bill that social investors care deeply about this issue,” said Eugene Ellmen, Executive Director of the SIO. “Now is the time to send letters and faxes to the Senate committee reviewing the legislation.” In February, SIO launched the Responsible Shareholder Rights campaign, an initiative to bring pressure on the federal government to end discriminatory treatment of investors bringing forward shareholder proposals on social and environmental issues. The campaign involves amendments to the Canada Business Corporations Act (CBCA). The CBCA is the act that generally governs corporate law in Canada. Of particular importance for the SIO is the fact that it governs the rights of shareholders to file resolutions with corporate management and the process of circulating those resolutions to other shareholders. The critical issue for the SIO is contained in a clause that permits corporate management to reject resolutions filed “primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes." This clause has been used several times as grounds for refusing to circulate a shareholder proposal, particularly since 1987 when the Ontario Court of Appeal, in Re Varity Corp. and Jesuit Fathers of Upper Canada et al upheld Varity's decision not to circulate a shareholder proposal on disinvestment from South Africa. This decision has had a major dampening effect on the shareholder process in Canada. This is particularly striking when you look at the flowering of active shareholdership in the US. Most recently, the clause was used to reject a resolution filed last year with Talisman Energy asking for information on Talisman’s activities in Sudan. Amendments to the legislation were introduced in the Senate in March but, disappointingly, new wording enables management to continue to reject proposals for “general economic, political, racial, religious, social or similar causes" unless the shareholder can prove that the proposal substantially affects the business or affairs of the corporation. This wording would continue to give management the right to reject proposals and force shareholders to defend their proposals in court, Ellmen said. Because of the costs of such action, the wording effectively gives management arbitrary power to exclude proposals. Members and supporters should write letters as soon as possible, Ellmen said, because the Senate committee’s review is expected to wrap up within weeks. For information on what you can do, a sample letter and a copy of SIO’s brief, see Shareholder Advocacy file.
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