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Lecture 3

LAW 533 Lecture 3: CSR – Chapter 3

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Law and Business
LAW 533
Kernaghan Webb

CSR – Chapter 3 Van Duzer, Shareholder Proposals (3-2)  CBCA provides limited right for shareholders to add items to the agenda (shareholder proposal of any matter proposed to discuss) (CBCA s. 137)  CBCA: corporation does not have to circulate proposal if it clearly appears that the proposal does not relate in any significant way to the business or affairs of the corporation  Prior to 2001 amendments, the CBCA contained another limitation: a corporation could refuse to distribute a proposal if it was primarily for the purpose of promoting general economic, political, racial, religious, social, or similar causes  Prior to 2001 amendments, proposal to have corporation divest investments in South Africa ruled to be for the purpose of promoting a political or social cause, so corporation not obliged to distribute it.  To be eligible to submit any proposal, on any matter, a shareholder or group of shareholders must: o Hold voting shares equal to at least 1 percent of the total voting shares outstanding at the date the proposal is submitted and worth at least $2000 at the close of business on the day before it is submitted; and o Have held the shares for at least six months prior to the date of submitting the proposal  A corporation does not have to circulate a proposal in 5 circumstances: (3-2) o Conduct of Meetings (3-3)  Same rules as quorum and parliament or as otherwise stated  A shareholder is entitled to discuss any matter with respect to which she could have submitted a proposal at an annual meeting  Shareholders have the right to speak to the matters on the agenda; the chair cannot arbitrarily terminate the meeting to prevent shareholders from discussing an item and voting on it.  May be conducted electronically Quorum  A majority of shares entitled to vote, represented in person or by proxy at the meeting, constitute a quorum unless the by-laws provide otherwise. (CBCA, s. 139)  Most by-laws provide that a certain number of shareholders, often only two, must be present in person or by proxy to constitute a quorum for holding a meeting. Voting  Unless the articles provide otherwise, each share gets one vote and matters are decided by a majority of votes cast on any resolution at the meeting. Mining Watch Canada (3-4)  Reveals a lack of understanding of the ethical responsibility to assure that shareholder resolutions that directly impact on locally affected communities do not undermine the efforts these communities are engaged in to protect their own rights  Should have the free prior and informed consent of locally affected communities before conducting assessments  The shareholder resolutions put forward…are fundamentally and irrevocably flawed and unacceptable as the communities directly affected by the Marlin Mine and by the HRIA were never consulted as to the content of the shareholder proposal or the subsequent MOU between the shareholder group and Goldcorp.  The affected communities have no direct role in setting the scope and the timelines of the assessment process, nor in selecting assessors and peer reviewers, nor in managing assessment process.  There were three socially responsible investors (pension plans, swedish…)  They didn’t even take the time to consult with the community which means that they’re not even in the interest of the community, its for the interest of the mining companies  What was the proposal? They were going to do a Human rights impact assessment which the info. was going to be offered by the community which they had no impact on  The community felt very shafted because they were going to spend all this time and energy and in the end it mightve not made any impact on them whatsoever, they don’t even have an express right to the final report  Who is MiningWatch? They seem to be some kind of an ngo (a body that has an interest in mining companies operating in a socially responsible way)  What did Goldcorp do with the proposal? They entered into a memorandum of understanding  What is mining Watch's criticism of the proposal? They want them to pull back on the mou, pull it back and start from scratch  A key principle of socially responsible investing – Do No Harm  In their view it is not ethical investing. You’re creating a system that if you do a minimal action and get a good hit from it, get closer to the community, figure out whats effective, make an impact O’Rourke, Politics of Stakeholder Engagement (3-6 to 3-11)  As this type of activism spreads, its providing an educative function, there's a connection between cross over proposals of csr and government law  Rederick evolution – moving away from generic inflammatory criticism to focusing on profitability, risk management and shareholder value  Using the language of business to criticize business  It appeals to the interest of the people in business, major shareholders to think about interests in this way and motivates them  How is this mechanism being used? Aim of filing proposals, defending them and voting, for many activists, is often not the final voting results, rather it is the access to the company that it brings, and the possibility to enter into dialogue and advocate for transparency.  Success is in the formal or informal changes made by a company as a result of the engagement process  Strengths: Its being used to get the company involved, engaging them more, they always have the right the withdraw their proposal  Limitations: they’re very costly, and time intensive, opportunity cost, sometimes it’s a whole lot of effort for not a good outcome  Legal Limitations: risky as there is a time limit on it  Relationship Difficulties: Some companies responses would be very small minded, Growing Traction Article (3-12
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