Rogers ex-chair Edward Rogers had power to form new board, lawyer argues

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A battle for management of Rogers Communication Inc (RCI) board opened in Canadian court docket on Monday with a lawyer for former chairman Edward Rogers arguing he had the authority to nominate a brand new board with out an in-person shareholder assembly.

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Lawyer Ken McEwan advised a British Columbia Supreme Court docket Justice Shelley Fitzpatrick that Edward Rogers required nearly all of shareholder votes to reconstitute the corporate’s board of administrators. As chairman of the household belief, he managed 97.5 per cent of the voting shares, giving him the authority to behave, McEwan added.

Rogers Communications is embroiled in a messy boardroom battle after a feud within the founding household erupted into the open, weighing on the inventory and elevating doubts concerning the destiny of a multibillion-dollar takeover.

The dispute inside the wi-fi, telecom and cable TV supplier was triggered after Edward Rogers, son of late founder Ted Rogers, failed in his try and take away Chief Govt Joe Natale in September, claiming he misplaced confidence in Natale’s means to guide the merged entity after the deliberate $20 billion takeover of Shaw Communications goes by means of.

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Edward Rogers retaliated utilizing his place as chair of the family-owned Rogers Management Belief, the entity that owns nearly all of voting shares within the firm, to represent a brand new board, which acknowledged him as chairman.

He then approached the Supreme Court docket of British Columbia, the place the corporate is included, to legitimize the brand new board.

Decide Fitzpatrick questioned McEwan about whether or not a gathering ought to have taken place earlier than Edward Rogers may act on behalf of the household belief. McEwan stated Edward Rogers had ample shareholders such {that a} assembly was not obligatory.

Stephen Schachter, a lawyer representing RCI, countered that firm guidelines require an in-person assembly to dismiss board members and refill their seats.

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Edward’s transfer put him at odds together with his mom and two sisters, who backed Natale, and resulted in his removing because the chairman of Rogers.

The household row enjoying out in public is a uncommon prevalence in Canada and has caught analysts and traders unexpectedly. The boardroom drama in the course of Rogers’ largest takeover is a distraction, analysts have warned. Shaw final week reiterated its assist for the deal.

“Shaw shareholders may get chilly ft and pull out of the deal,” stated Keith Snyder, an analyst at CFRA Analysis. If it pulls out, he added, that may give opponents like BCE Inc or Telus Corp an opportunity to make a bid for the corporate.

Shaw inventory closed on Monday at $35.47, a reduction to Rogers’ supply worth of $40.50, which is an indication that some market gamers have doubts concerning the success of the deal.

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In his affidavit, Edward Rogers stated the board agreed to exchange Natale as CEO. However Loretta Rogers, the household’s matriarch, stated her resolution to initially assist Edward was based mostly on mistaken and incomplete data offered by her son, and that she modified her view on studying further information and continues to again Natale.

John MacDonald, who was named Rogers’ chairman after Edward’s exit, stated in his affidavit the board and members of the family had not voted to terminate Natale, and that as an alternative they believed he had “exceeded his targets” as CEO.

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Matthew Dolgin, an analyst at Morningstar, believes a decision can’t be anticipated quickly. The occasions have weighed on Rogers’ inventory, which is down 1.4 per cent this yr, in contrast with a 17.9 per cent rally in BCE and a 12.67 per cent achieve in Telus.

“Usually we’d extra readily dismiss the actions and needs of an ousted chairman, however the complexity of the agency’s household management makes it something however cut-and-dried,” Dolgin stated.

RCI operates beneath a novel possession construction whereby 10 folks near the late founder, together with his 4 kids and widow, and a number of other longtime household associates, sit on the Advisory Committee of the Rogers Management Belief. The belief owns 97.5 per cent of Class A voting shares in RCI.

© Thomson Reuters 2021