Filing a shareholder proposal in Canada

This country factsheet provides an overview of the key legal and technical processes related to filing a shareholder proposal in Canada. Seven additional country factsheets are available, covering Australia, France, Germany, Japan, South Africa, the UK and the US.

For more information on how to use shareholder proposals to effect positive change at investee companies, read our guide to filing impactful shareholder proposals.

The information on regulatory requirements in this guidance is correct as of 2022.

Overview of key legal and technical processes in Canada
Key legislation	Businesses can be incorporated under Canadian federal or provincial law and investors should be aware of the differences, including procedures around the right to file. The Canada Business Corporations Act (CBCA) governs federal law^[1] for the purpose of this factsheet CBCA rules are mainly noted.^[2] Canadian securities laws govern matters such as shareholder meetings and securities regulations and are governed on an individual basis by each province or territory. The Canadian Securities Administrators (CSA) is an umbrella organisation that seeks to improve, coordinate, and harmonise regulation of the Canadian Market.
Right to file Can a shareholder propose an issue to be included and voted upon at a general meeting?	Shareholders in Canada generally have a clear right to submit proposals and they are frequently used to advance environmental, social and governance objectives of shareholders. Section 137 of the CBCA states “a registered holder or beneficial owner of shares that are entitled to be voted at an annual meeting of shareholders may (a) submit to the corporation notice of any matter that the person proposes to raise at the meeting (a “proposal”); and (b) discuss at the meeting any matter in respect of which the person would have been entitled to submit a proposal.”
Resolution ‘ask’ What power do shareholders have to request a company to take a certain action?	Shareholders have wide powers, i.e., any matter that the person proposes to raise at the meeting. This generally means any matter not falling within certain specified exceptions – in other words, if a matter is under the control of directors (as per the relevant laws and the company’s constitution), the shareholders do not have the power to pre-empt the directors and legally obligate them to take any action approved in a proposal.
Threshold requirements What level of shareholding is required to file?	Under the CBCA, the minimum shareholding requirement is no less than 1% of the total number of voting capital or voting shares with a fair market value of at least CAD$2,000. Threshold levels differ across provinces, from no requirement to 1% (in Alberta and British Columbia proposals must also be supported by at least 5% of the total number of voting shares). In certain Canadian jurisdictions, shareholders are able to aggregate their holdings under the CBCA.^[3]
Ownership period Are there any rules around how long shares must have been held for?	Under the CBCA, there is a six-month minimum holding period. If a person who submits a proposal fails to continue to hold or own the number of shares up to and including the day of the meeting, the corporation is not required to set out in the management proxy circular, or attach to it, any proposal submitted by that person for any meeting held within the prescribed period following the date of the meeting.^[4] Ownership period requirements differ across provinces, from no requirement to up to two years in Alberta and British Columbia.
Demonstrating ownership What paperwork must proponents provide to demonstrate their holding?	The filing must include the number of shares held by the person and the person’s supporters, if applicable, and the date the shares were acquired. Proof of ownership should be demonstrated in certificated form or with a custodial statement.
Filing packet What formal documents are required to submit a proposal and in what form should they be sent?	The documents should be presented to the corporate secretary (or another person as advised in the proxy statement) in written form (English language). The submission should include a cover letter, the draft resolution, supporting statement and where applicable a custodian letter. Sign-upon-receipt mail is advised for proof of submission. Word limits are generally applied to the length of the proposal and supporting statement (ranging from 200-1,000 words). Under the CBCA, the limit is 500 words.
Key filing dates When must the resolution be received by?	A proposal should be received before, or by close of business of the company’s filing deadline. Companies generally publish their filing deadlines for the upcoming proxy statement in their previous year’s proxy statements and these dates vary from year to year. Under the CBCA, the deadline is 90 days before the anniversary date of notice of meeting for the previous annual meeting of shareholders.
Right to reject of appeal Can companies reject the proposal and is there a formal appeals process?	Companies are not required to include a proposal if the following circumstances are met: Not submitted in time; Seeks to redress a personal grievance; Does not relate in a significant way to the affairs of the corporation or the business; If the proponent has had a resolution included on the ballot in the previous two years but failed to present in person or by proxy; Substantively the same proposal was submitted in a management meeting or dissident proxy circular in the previous two years and was defeated; The shareholder rights are being abused to secure publicity. If a company refuses to include a proposal in a management proxy circular, the corporation shall, within the prescribed period after the day on which it receives the proposal or the day on which it receives the proof of ownership, notify in writing the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal. Unlike in the US, there are no administrative avenues for resolving disputes. Proponents would need to look to judicial intervention if aggrieved by a decision.
Resubmission Can a proponent re-file at a future AGM if a resolution fails to gather enough support to pass?	As above, under the CBCA a proponent cannot resubmit a proposal for which it did not receive the prescribed minimum amount of support at the previous meeting. The resubmission thresholds are:^[5] 3% of the total number of shares voted, if the proposal was introduced at an annual meeting of shareholders; 6% of the total number of shares voted at its last submission to shareholders, if the proposal was introduced at two annual meetings of shareholders; and 10% of the total number of shares voted at its last submission to shareholders, if the proposal was introduced at three or more annual meetings of shareholders.
Withdrawal Can a shareholder withdraw a resolution after it is filed?	Withdrawal of a resolution is possible and commonly happens in the few days before the AGM when the proponent and the company reach an agreement. The withdrawal is normally formalised through a contractual agreement with signature of both parties. Once a withdrawal agreement is signed, the company will not include the text of the resolution in the management information circular but in some instances, it may acknowledge the withdrawal.
Representation Is the filer of a shareholder resolution proposal required to attend the AGM?	The filing proponent or a representative of the proponent is required to present the proposal and make a statement in support of the proposal. Another person, who can be another representative of the proponent, must ‘second’ the proposal (similar to the concept of ‘witness’ under civil law). Presenting the proposal is both to authenticate the proposal and speak to shareholders. It is procedural, and an opportunity for a proponent to promote the message.
Voting thresholds What is the voting threshold required for the resolution to pass?	An ordinary resolution is passed by a majority of the votes cast by the shareholders who voted in respect of that resolution, being a simple majority vote of 50% plus one of the votes cast by the voting shareholders. To pass a special resolution (if seeking to amend the articles), the holders of no less than two-thirds of the votes cast must approve it.
Useful resources	Thomson Reuters Practical Law (2021), Shareholders’ Rights in Private and Public Companies in Canada: Overview The Law Reviews (2022, The Shareholder Rights and Activism Review: Canada

Overview of key legal and technical processes in Canada

Key legislation

Businesses can be incorporated under Canadian federal or provincial law and investors should be aware of the differences, including procedures around the right to file.

The Canada Business Corporations Act (CBCA) governs federal law^[1] for the purpose of this factsheet CBCA rules are mainly noted.^[2]

Canadian securities laws govern matters such as shareholder meetings and securities regulations and are governed on an individual basis by each province or territory. The Canadian Securities Administrators (CSA) is an umbrella organisation that seeks to improve, coordinate, and harmonise regulation of the Canadian Market.

Right to file

Can a shareholder propose an issue to be included and voted upon at a general meeting?

Shareholders in Canada generally have a clear right to submit proposals and they are frequently used to advance environmental, social and governance objectives of shareholders.

Section 137 of the CBCA states “a registered holder or beneficial owner of shares that are entitled to be voted at an annual meeting of shareholders may (a) submit to the corporation notice of any matter that the person proposes to raise at the meeting (a “proposal”); and (b) discuss at the meeting any matter in respect of which the person would have been entitled to submit a proposal.”

Resolution ‘ask’

What power do shareholders have to request a company to take a certain action?

Shareholders have wide powers, i.e., any matter that the person proposes to raise at the meeting.

This generally means any matter not falling within certain specified exceptions – in other words, if a matter is under the control of directors (as per the relevant laws and the company’s constitution), the shareholders do not have the power to pre-empt the directors and legally obligate them to take any action approved in a proposal.

Threshold requirements

What level of shareholding is required to file?

Under the CBCA, the minimum shareholding requirement is no less than 1% of the total number of voting capital or voting shares with a fair market value of at least CAD$2,000.

Threshold levels differ across provinces, from no requirement to 1% (in Alberta and British Columbia proposals must also be supported by at least 5% of the total number of voting shares).

In certain Canadian jurisdictions, shareholders are able to aggregate their holdings under the CBCA.^[3]

Ownership period

Are there any rules around how long shares must have been held for?

Under the CBCA, there is a six-month minimum holding period. If a person who submits a proposal fails to continue to hold or own the number of shares up to and including the day of the meeting, the corporation is not required to set out in the management proxy circular, or attach to it, any proposal submitted by that person for any meeting held within the prescribed period following the date of the meeting.^[4]

Ownership period requirements differ across provinces, from no requirement to up to two years in Alberta and British Columbia.

Demonstrating ownership

What paperwork must proponents provide to demonstrate their holding?

The filing must include the number of shares held by the person and the person’s supporters, if applicable, and the date the shares were acquired. Proof of ownership should be demonstrated in certificated form or with a custodial statement.

Filing packet

What formal documents are required to submit a proposal and in what form should they be sent?

The documents should be presented to the corporate secretary (or another person as advised in the proxy statement) in written form (English language).

The submission should include a cover letter, the draft resolution, supporting statement and where applicable a custodian letter.

Sign-upon-receipt mail is advised for proof of submission.

Word limits are generally applied to the length of the proposal and supporting statement (ranging from 200-1,000 words). Under the CBCA, the limit is 500 words.

Key filing dates

When must the resolution be received by?

A proposal should be received before, or by close of business of the company’s filing deadline. Companies generally publish their filing deadlines for the upcoming proxy statement in their previous year’s proxy statements and these dates vary from year to year.

Under the CBCA, the deadline is 90 days before the anniversary date of notice of meeting for the previous annual meeting of shareholders.

Right to reject of appeal

Can companies reject the proposal and is there a formal appeals process?

Companies are not required to include a proposal if the following circumstances are met:

Not submitted in time;
Seeks to redress a personal grievance;
Does not relate in a significant way to the affairs of the corporation or the business;
If the proponent has had a resolution included on the ballot in the previous two years but failed to present in person or by proxy;
Substantively the same proposal was submitted in a management meeting or dissident proxy circular in the previous two years and was defeated;
The shareholder rights are being abused to secure publicity.

If a company refuses to include a proposal in a management proxy circular, the corporation shall, within the prescribed period after the day on which it receives the proposal or the day on which it receives the proof of ownership, notify in writing the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal.

Unlike in the US, there are no administrative avenues for resolving disputes.

Proponents would need to look to judicial intervention if aggrieved by a decision.

Resubmission

Can a proponent re-file at a future AGM if a resolution fails to gather enough support to pass?

As above, under the CBCA a proponent cannot resubmit a proposal for which it did not receive the prescribed minimum amount of support at the previous meeting. The resubmission thresholds are:^[5]

3% of the total number of shares voted, if the proposal was introduced at an annual meeting of shareholders;
6% of the total number of shares voted at its last submission to shareholders, if the proposal was introduced at two annual meetings of shareholders; and
10% of the total number of shares voted at its last submission to shareholders, if the proposal was introduced at three or more annual meetings of shareholders.

Withdrawal

Can a shareholder withdraw a resolution after it is filed?

Withdrawal of a resolution is possible and commonly happens in the few days before the AGM when the proponent and the company reach an agreement. The withdrawal is normally formalised through a contractual agreement with signature of both parties. Once a withdrawal agreement is signed, the company will not include the text of the resolution in the management information circular but in some instances, it may acknowledge the withdrawal.

Representation

Is the filer of a shareholder resolution proposal required to attend the AGM?

The filing proponent or a representative of the proponent is required to present the proposal and make a statement in support of the proposal.

Another person, who can be another representative of the proponent, must ‘second’ the proposal (similar to the concept of ‘witness’ under civil law).

Presenting the proposal is both to authenticate the proposal and speak to shareholders. It is procedural, and an opportunity for a proponent to promote the message.

Voting thresholds

What is the voting threshold required for the resolution to pass?

An ordinary resolution is passed by a majority of the votes cast by the shareholders who voted in respect of that resolution, being a simple majority vote of 50% plus one of the votes cast by the voting shareholders.

To pass a special resolution (if seeking to amend the articles), the holders of no less than two-thirds of the votes cast must approve it. 

Useful resources

Thomson Reuters Practical Law (2021), Shareholders’ Rights in Private and Public Companies in Canada: Overview

The Law Reviews (2022, The Shareholder Rights and Activism Review: Canada