CPAC doesn’t see undue influence on its operations if Rogers-Shaw merger approved, giving incumbent majority shares

Cable Public Affairs Channel Inc. (CPAC) is bringing forward an amendment at its annual general meeting that a majority of shareholders are required to approve any shareholder matter, including the appointment of auditors, in the “interest of equity and fairness at the board level” if the merger between Rogers Communications Inc. and Shaw Communications Inc. is approved. It also told the commission that it would prefer if the two companies consolidate their shareholdings in CPAC at the close of the transaction, if approved. Tuesday, the commission resumed its hearing on the merger, beginning with testimony by members of CPAC and how the transaction may affect control of the non-profit. If Rogers acquires Shaw, it will result in Rogers -- which currently holds 41.58 per cent of shares in CPAC -- holding 66.75 per cent of CPAC’s voting shares, becoming majority shareholder. The incumbent claimed that it would not give Rogers effective control because it cannot elect a majority of CPAC’s directors. “The primary indicator for control is whether an individual shareholder or any other entity has the ability to cause a corporation to undertake a course of action. And because of the share structure that CPAC has -- which limits the votes for the most important matter, which is the election of the board -- Rogers will not have the ability to force feedback to undertake any course of action,” CPAC board member Jim Deane told the CRTC commissioners. CRTC commissioner Ellen Desmond asked the CPAC board to respond to comments made by the Forum for Research and Policy and Communications (FRPC) which suggested that the approval of the transaction would result in Rogers having de facto control of CPAC. “As CPAC Inc.’s current articles of incorporation would permit Rogers to vote its shares on all other aspects of CPAC’s business and operations this argument is at best disingenuous. It has made no commitments to strengthen CPAC’s programming,” FRPC wrote in a September submission to the CRTC regarding the merger. Deane responded that the control of CPAC is ultimately the responsibility of the board which shareholders elect with one vote each rather than with a proportionate amount of votes to their shares. He added that the only matter shareholders vote on the basis of their share proportions is the appointment of auditors at the annual general meeting. “I think it's safe to say that the control of the CPAC has been at the board level for the past 30 years and I think it's a governance model that's worked well,” Deane said. Deane added that with 66.7 per cent of the shares, Rogers would have the ability to approve auditors but said the board is bringing forward an amendment at its February annual general meeting that in addition to votes based on the percentage of shares held, it would also require the approval of a numeric majority of actual shareholders. The board is responsible for hiring the president and general manager, establishing the strategic direction for CPAC, and providing financial oversight. Hiring staff is exclusively the purview of CPAC’s executive and operational management. “I can speak to my 20 years experience on the CPAC board and assure you we all have an equal say on carrying out the board responsibilities… I don't see any undue influence. I think the programming policy creates a brick wall between the board and programming,” he said, when asked by Desmond if some board members have more influence over others. CPAC legal counsel and secretary, Joel Fortune added that there is nothing in CPAC’s constituting documents, bylaws or any other legal requirement that “treats any director differently than any other group.” Desmond noted that Rogers proposed to nominate just one member to the CPAC board of directors if the transaction is approved and, if required, would consolidate its ownership in CPAC into one corporate entity once the transaction closes. When asked which course of action CPAC would prefer, Fortune said “the preferred approach is the consolidation of shareholdings which ensures in fact that there is only one vote and effectively one nominee.” “So consolidation makes a lot of sense,” he said. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca.

CPAC doesn’t see undue influence on its operations if Rogers-Shaw merger approved, giving incumbent majority shares

Broadcast | November 23, 2021

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CPAC doesn’t see undue influence on its operations if Rogers-Shaw merger approved, giving incumbent majority shares

Broadcast | November 23, 2021

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