AvenEx Energy Corp AVNDF

Case law requires AvenEx shareholder vote on sale

[kingofcotton]

https://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/6783.htm

 

Canadian law affords directors a wide degree of latitude when dealing with corporate property. Courts are generally deferential to the diligent and reasonable efforts of directors to act in the best corporate interest. Shareholder approval of property disposition is required by law only where the transaction deals with "all or substantially all" of the corporation's assets. Courts have taken their cue from the broad language of the CBCA and other corporate statutes, and tend to eschew set formulas or precise standards, preferring to consider whether the sale would fundamentally change or jeopardize the continued existence of the corporation, contrary to the expectations and investment purposes of shareholders.

Directors are not prevented from pursuing advantageous transactions merely because the assets involved are large or are central to the business. Instead, the limit on dealing freely with corporate property is placed higher-the assets involved must be of significant size and of such importance to the corporation that the disposition would have to fundamentally change the nature of the corporation, in either shifting its business objectives or preventing it from continuing to operate as a profitable enterprise.

[Joe454]

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[JReynolds]

If we were to read the extract closely, this part : '...preventing it from continuing to operate as a profitable enterprise. '..., would warrant a shareholder vote whether Elbow Rtver can be disposed or not. Why ? Because the Income Statement clearly states how much Elbow River contributes to the cashflow and profit of Avenex, and without ER, what will happen to the profit ? Opinions

[Joe454]

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[JReynolds]

Well, obviously, doing both are not feasible anymore now. The first will not stop the sale of ER. The old management would have sold ER by then, or now ??? The second recommended action is even worse, i'd be selling at a heavy loss. Are we saying we are trapped here ? I wrote what I wrote because of what I interpreted in the Case Law brought-up. I like your previous posts : Things will be fine

[pone]

It sounds like a court case could be brought against Avenex by shareholders arguing that sale of Elbow River effectively impaired the operating company and substantially changed its ability to operate.   However:   1) Who is going to pay the legal bill for this?  It would require a hedge fund buying a very large piece and amortizing the legal cost into the investment cost.   2)

[kingofcotton]

https://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/6783.htm "the assets involved must be of significant size and of such importance to the corporation that the disposition would have to fundamentally change the nature of the corporation, in either shifting its business objectives or preventing it from continuing to operate as a profitable enterprise." Alberta Securities CommissionFile a

[Joe454]

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[deisman]

Are you suggesting that those of us against this merger file a complaint about the sale of ER happening without shareholder participation? Alberta Securities CommissionFile a Complaint [phone] [e-mail] File a complaint online https://www.albertasecurities.com/Enforcement/Pages/FileandInvestorComplaint.aspx

[Joe454]

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