presented by: hartley r. nathan, q.c. partner minden gross llp ryan gelbart associate
DESCRIPTION
Minden Gross LLP & ACC Canada present THE PREPARATION FOR AND CONDUCT OF BOARD MEETINGS November 3, 2010. Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate Minden Gross LLP. Guest Speaker: Carol McNamara VP, Assistant General Counsel - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/1.jpg)
Minden Gross LLP & ACC Canada present
THE PREPARATION FOR AND CONDUCT OF BOARD MEETINGS
November 3, 2010Presented by:
Hartley R. Nathan, Q.C.PartnerMinden Gross LLP
Ryan GelbartAssociate Minden Gross LLP
Guest Speaker:
Carol McNamara VP, Assistant General Counseland Corporate SecretaryRoyal Bank of Canada
![Page 2: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/2.jpg)
Strategy Tip
• Do not automatically adopt a “form” of pre-printed By-law for the sake of expediency.
![Page 3: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/3.jpg)
Authority to Call Meetings
• Provisions relating to the calling of meetings typically contained in company By-laws
• Generally a duty of the Corporate Secretary• S. 126(8) of the OBCA permits a quorum of
directors to call a meeting• Proceedings conducted at a meeting called
by an unauthorized person may be null and void
![Page 4: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/4.jpg)
Strategy Tip
• A notice should set out by whose authority it has been given and should be signed by the empowered officer - where the secretary signs a notice given by order of the directors or another officer, it is good practice to have it so state.
![Page 5: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/5.jpg)
Notice Requirements
• Only statutory time requirement is 10 days notice under OBCA for meeting called by quorum
• Must look to company By-laws• Waivers are permitted under OBCA /
CBCA
![Page 6: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/6.jpg)
Strategy Tip
• Even when all of the directors attend a meeting being called on short notice, it is still good practice to have a waiver signed in order to avoid any subsequent challenge to the validity of the meeting on the grounds that proper notice was not given
![Page 7: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/7.jpg)
To Whom To Send Notice
• Every director has the right to attend board meetings
• It is not open to a corporation to exclude a director from a meeting on the basis that the director is unfit, has allegedly engaged in misconduct, sits on the board of a competitor or has been convicted of a criminal offence
• Notice should be given to a director who has indicated verbally that he cannot attend a meeting on the basis that he or she may change his or her mind
![Page 8: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/8.jpg)
Form of Notice
• Must check By-laws to determine level of disclosure to be set out in notice
• Few statutory requirements:– Notice of meeting called by quorum under
S. 126(8) of OBCA must state general nature of business to be conducted
– 114(5) of CBCA says that certain matters to be transacted must be listed in notice (i.e. approving take-over bid)
![Page 9: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/9.jpg)
Strategy Tip
• Avoid surprises - whether or not there is a disclosure requirement in the By-laws, the desirable practice is to provide disclosure of all matters to be addressed at the meeting
![Page 10: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/10.jpg)
Meeting Materials
• Agenda– Standing Agenda– Specific Meeting Agenda– Chair’s Agenda– Consent Agenda
• Materials Book
– Reliance on info volunteered by management is often not enough
![Page 11: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/11.jpg)
Strategy Tip
• The corporation should designate a “point person” to whom directors can direct questions or from whom directors are able to obtain access to information or copies of documents, if necessary
![Page 12: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/12.jpg)
Essentials of a Valid Notice
• Contains the date, time and place of the meeting
• Contains a description of the purpose of the meeting
• Contains a description of any special business to be conducted
• Complies with requirements in corporate statutes and By-laws as to form and content
• Must be issued on good authority
![Page 13: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/13.jpg)
Essentials of a Valid Notice Cont’d
• Must be delivered in the manner prescribed in the By-laws
• Must allow the appropriate length of time between service and the date of meeting
• Must be sent to every person entitled to receive it
• Should be accompanied by agenda and materials book
![Page 14: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/14.jpg)
Refusal to Attend
• A concerted plan by a director to absent himself or herself from a meeting in order to prevent a quorum may be improper
• Courts have been reluctant to issue an injunction to compel attendance but a damages claim may be available
• Consider removing the dissident director through a special meeting of shareholders
![Page 15: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/15.jpg)
Strategy Tip
• By-laws can provide that if a director fails to attend a certain number of meetings without reasonable excuse, he or she will be deemed to have resigned
![Page 16: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/16.jpg)
Role of the Chair
• Conduct of a board meeting is largely in the hands of the Chair
• Chair expected to preserve order• Chair responsible for conducting votes and
granting adjournments
• Chair authorized to decide on questions arising at the meeting
![Page 17: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/17.jpg)
Strategy Tip
• If there are divided factions within the board consider an independent Chair, and/or consider counsel for each faction
• This should be by agreement of the disputing parties, if possible
![Page 18: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/18.jpg)
Debate
• Corporation entitled to have directors engage in meaningful debate before a decision is made
• All directors are entitled to participate including the minority even though they will be bound by the majority decision
![Page 19: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/19.jpg)
Casting Vote
• No casting vote for the Chair at common law or under corporate statutes
• Must be provided for in the By-laws• Casting vote used to remedy occasional tie
votes not to deal with continuous and settled deadlock condition
• Chair must act in good faith in casting a tie-breaking vote but is not compelled to cast it
![Page 20: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/20.jpg)
Secret Ballots
• Not typically used
• Could give rise to problems – i.e. How does one dissent in these circumstances and have this reflected in minutes?
• Could be within the discretion of the Chair to use secret ballots for sensitive decisions
![Page 21: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/21.jpg)
Strategy Tip
• Drafters of the By-law using some foresight and careful drafting could make effective provision for voting by secret ballot
![Page 22: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/22.jpg)
Appeals from Decisions of the Chair
• The Chair of a meeting has prima facie authority to decide all questions relating to procedure at the meeting. If the Chair’s decision is challenged, any member may request a ruling from the meeting itself. Other decisions are deemed to be correct unless successfully challenged in Court by a member
• On procedural matters, appeal is to the meeting
• On other matters, recourse is to the Court
![Page 23: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/23.jpg)
Dealing with Disorder
• Procedure and appropriate decorum at a meeting is largely in the hands of the Chair
• Chair can declare a recess or declare adjournment
• In extreme cases the Chair can terminate the meeting
• Chair can expel a director with the support of the majority
![Page 24: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/24.jpg)
Strategy Tip
• The Board should establish a written code of conduct for directors to adhere to, which includes consequences of non-compliance
• Code of conduct should be adopted by By-law.
![Page 25: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/25.jpg)
Conflicts of Interest
• Directors must not allow personal interests to conflict with the interests of the corporation
• The requirement to disclose interests in contracts are set out in Section 120 of the CBCA and 132 of the OBCA.
• Under the OBCA s.132(5) a conflicted director may not stay for any discussion regarding the issue under discussion
• Nominee directors are not to be servient to their appointers
• Position of a nominee director highlights the conflict situation
![Page 26: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/26.jpg)
The Independence of Directors
• Directors of regulated corporations
• Duties are to the corporation as fiduciaries
• Independent directors should not support a course of action that is inconsistent with their fiduciary duties
• There are numerous options for a director to consider if unable to acquiesce in a decision
![Page 27: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/27.jpg)
Role of the Corporate Secretary
• Arrange and manage the process of calling board meetings
• Ensure effective running of activities of the Board and committees
• Act as a primary point of contact
![Page 28: Presented by: Hartley R. Nathan, Q.C. Partner Minden Gross LLP Ryan Gelbart Associate](https://reader036.vdocuments.mx/reader036/viewer/2022062400/568147e5550346895db51dac/html5/thumbnails/28.jpg)
Contact Us
Hartley R. Nathan, Q.C., PartnerMinden Gross LLP(416) [email protected]
Ryan Gelbart, AssociateMinden Gross LLP(416) [email protected]