Advance Notice Provisions: From 0 to 500+ in 20 Months; 2013 Canadian Advance Notice Provisions Study 


July 2013

Securities Bulletin

Following the adoption of advance notice provisions by our clients commencing in October 2011, we publically advocated the adoption of advance notice provisions by Canadian public companies in concluding that an "advance notice by-law is an important tool for a public company in order to ensure that all shareholders are treated fairly and are provided with timely information in connection with the nomination of directors."1 Advance notice provisions are usually used in Canada to prevent shareholders from nominating directors through a dissident proxy circular or from the floor of a meeting, without in each case providing an issuer with adequate time to consider and respond in an informed way to such proposed nominations – advance notice provisions are generally not used in circumstances where nominations are made by shareholder proposals or pursuant to the requisition of a shareholders' meeting.

As we come to the end of the 2013 proxy season, we thought it would be informative and helpful to review the rate of adoption of advance notice provisions. We have concluded that, as of June 28, 2013, advance notice provisions have been announced, implemented or adopted as by-laws, board policies, by way of the amendment of articles and by amending declarations of trust by more than 500 Canadian public companies or trusts.2 In March 2012, we stated that "[i]t is expected that over the next few years, numerous Canadian public companies – particularly mid and micro-cap companies – will implement such by-laws".3 As it turns out, the rate of adoption has been more significant than we originally thought, and it is fair to say that advance notice provisions are now commonplace in Canada.

With this rapid adoption of advance notice provisions, we thought it would be helpful to review advance notice provisions to consider various issues, including:

  • the specific terms and conditions of advance notice provisions that are being adopted,
  • the manner in which advance notice provisions are being implemented – by board policy, bylaw, amendment of articles or amendment of declaration of trust, 
  • the results of votes taken to approve advance notice provisions, and
  • the impact that proxy advisory firms are having on the adoption of advance notice provisions.

We intend to publish the results of our review by August, 2013.

1 Paul Davis & Stephen Genttner, "Advance Notice By-Laws – A Tool to Prevent a Stealth Proxy Contest or Ambush" (March 2012).

2 Being companies incorporated under the Canada Business Corporations Act or under one of the applicable provincial or territorial statutes, or trusts governed by the laws of a province or territory of Canada. 

3 Supra note 1.

by Paul Davis, James Munro and David Mendicino

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013