The battle for control atop of Rogers Communications Inc. (TSX:RCI.B) appears to be over after RCI’s board said it will not appeal the B.C. Supreme Court decision Friday.
The terse statement, released late Sunday, said simply that the telecom giant “will not seek an appeal of last week’s British Columbia Supreme Court ruling.” This contradicted earlier statements made by RCI lawyer Stephen Schachter that his clients were planning to make an expedited appeal – and were worried about interference from Edward Rogers, who won the decision.
Edward Rogers, the son of RCI founder Ted Rogers, petitioned the court to validate his ability to make changes to the RCI board of directors – even though he was ousted as board chair earlier in October. He cited his role as chair that the trust that controls RCI – which holds 97.5% of the company’s voting shares – as his justification for having that ability (in accordance with B.C.’s Business Corporations Act).
On Friday, B.C. Supreme Court justice Shelley Fitzpatrick ruled in favour of Edward Rogers. Fitzpatrick also rejected an attempt by Schachter to stay the effects of the decision, meaning the court order stemming from the decision was effectively immediately on Friday afternoon.
The order confirms that “John Clappison, David Peterson, Bonnie Brooks, Ellis Jacob and John A. MacDonald were removed as directors of RCI” as Edward Rogers had ordered as part of the consent resolution he could issue as the holder of a majority of voting shares. The five directors were part of RCI’s board that both voted Edward Rogers out as RCI board chair and opposed an earlier plan by Edward Rogers to dismiss RCI president/CEO Joe Natale.
The court order also confirms that Edward Rogers’s decision to replace those five RCI directors with Michael Cooper, Jack Cockwell, Jan Innes, Ivan Fecan and John Kerr are effective immediately. That board, named by Edward Rogers after his ouster as RCI chair, voted him back in as RCI chair in late October (which was not recognized by RCI prior to Friday’s decision).
As of Monday morning, RCI's website now reflects the changes - despite not recognizing Edward Rogers' appointments prior to Friday's decision announced by Fitzpatrick.
Richard Leblanc, professor of governance, law & ethics at York University and the director of the Financial Accountability Program at the Bar of Ontario, said even with RCI’s decision not to pursue an appeal, there are likely other moves coming – if not from RCI itself, then potentially from other investors and regulators.
Leblanc, who called the B.C. Business Corporations Act “outdated” for allowing Edward Rogers to make changes to RCI’s board through a consent resolution – not requiring a shareholders’ meeting in its stead – said there are still potential avenues for dissatisfied investors to challenge the situation.
“This is not over on Friday,” Leblanc said, referring to the Supreme Court decision announcement. “Regulators should be called upon to scrutinize why this occurred.”
Specifically, Leblanc noted the presence of an “oppression” challenge that may be used by investors.
“We have a broad remedy here in Canada – and it’s also in B.C. - that if one or more shareholders feel their interests have been unfairly disregarded or prejudiced, they are able to launch an oppression case. And that shareholder can be anyone; it can be family members or an institutional investor.”
Regardless, Leblanc said this may be a good opportunity for legislators to revisit what he considers loopholes in corporate governance laws.
“There are several more shoes to drop because of the importance of the case,” he said. “There is intense dislike between family members, and in terms of corporate governance, should this be happening?”
