Case: Rogers v. Rogers Communications Inc., 2021 BCSC 2184

Executive Summary:

• Background: Rogers Communications Inc. (RCI), a major telecommunications and media company controlled by the Rogers family, witnessed an inter-familial power struggle over the board of directors. The conflict involved Edward Rogers leading one faction and RCI, along with Edward’s mother and sisters, comprising the other faction.
• Conflict Details: The power struggle arose when Edward expressed concerns about RCI’s CEO Joe Natale’s performance during the company’s purchase of Shaw Communications. The board approved Natale’s resignation, but the other faction sought to rescind it, leading to further tensions.
• Unilateral Action: Edward, as chairman of RCI’s controlling shareholder, unilaterally removed and replaced five independent directors using a consent resolution, which was met with opposition from RCI.
• Court Ruling: The British Columbia Supreme Court ruled in favor of Edward, declaring the consent resolution valid. The court emphasized that the resolution only required approval from shareholders holding two-thirds of voting shares, with no need for an actual meeting.
• Significance: The case showcases the distinction between BC’s corporate statute and others, as a two-thirds majority of voting shareholders was sufficient for a consent resolution. The ruling sets an essential precedent for corporate governance cases in British Columbia, reaffirming the statute’s wording over policy-based arguments regarding shareholder democracy.

Rogers v. Rogers Communications Inc., 2021 BCSC 2184, involves a power struggle within Rogers Communications Inc. (RCI), a major telecommunications and media company primarily controlled by the Rogers family. The dispute emerged when Edward Rogers led one faction, while RCI and Edward’s mother and sisters constituted the other faction.

The conflict intensified when RCI was purchasing Shaw Communications, and Edward expressed concerns about the CEO, Joe Natale’s, performance. Although the board approved Natale’s resignation, the other faction sought to rescind it, escalating tensions.

As the power struggle unfolded, Edward, as chairman of RCI’s controlling shareholder, took unilateral action by using a consent resolution to remove and replace five independent directors from the board. RCI opposed this move, leading to a legal battle.

The case eventually came before the British Columbia Supreme Court, where Edward sought to have the consent resolution declared valid. The court ruled in his favor, emphasizing that the resolution only required approval from shareholders holding two-thirds of voting shares, with no requirement for an actual meeting.

The ruling in this case carries significant implications for corporate governance cases in British Columbia. It highlights a crucial difference in BC’s corporate statute compared to other provinces, where a two-thirds majority of voting shareholders suffices for a consent resolution. This decision reaffirms the importance of the statute’s wording and interpretation, placing it above policy-based arguments regarding concepts like shareholder democracy.

The case showcases the complexities and challenges that can arise within family-controlled companies, underscoring the need for clear and well-defined governance structures to avoid conflicts of interest and ensure fair representation for all shareholders. It also raises questions about the balance of power within such companies and the importance of adhering to legal procedures when making significant corporate decisions.

Overall, Rogers v. Rogers Communications Inc. serves as an essential precedent for corporate litigation in British Columbia, setting a clear standard for consent resolutions and emphasizing the significance of interpreting corporate statutes accurately in cases involving shareholder disputes and governance matters.