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Court battle over control of Rogers communications empire underway in Vancouver

Edward Rogers misinterpreting B.C. law on removal of board members: family’s lawyer
The Rogers corporate head office and headquarters in Toronto on Monday, Oct. 25, 2021. A battle for control of Rogers Communications Inc. will make its way to B.C. Supreme Court today. THE CANADIAN PRESS/Evan Buhler

The lawyer for the head of the Rogers family trust says his client had a right to remove and replace five directors without a meeting of shareholders, but a lawyer who represents opposing family members argues that’s a simplistic interpretation of corporate laws in British Columbia.

Stephen Schachter, lawyer for Edward Rogers’ mother and two sisters, who are board members, told a B.C. Supreme Court judge Monday that “ordinary resolution” stipulates removal or election of directors must occur at a meeting where shareholders have a right to participate.

That’s part of the long-standing public commitment to strong corporate governance practice by Rogers Communications Inc., Schachter said of the Toronto-based company, which is incorporated in B.C.

“He cannot be thumbing his nose at due process,” Schachter said of Edward Rogers. “This is a publicly traded company.”

Ken McEwan, a lawyer for Edward Rogers, told the court earlier that his client had the authority to that decision under “ordinary resolution” of the board of shareholders because he has the power to vote on behalf of the trust, which controls 97.5 per cent of the shares in Rogers Communications Inc.

However, Schachter told the court that the company specifically rejected filling vacancies of board directors outside of a meeting.

“It’s relevant, contextual information for your ladyship to know the public commitments by the company, signed off by Edward, are not in line with the one-day written resolution to remove the independent directors and replace them,” Schachter told Justice Shelley Fitzpatrick.

“Is that an all-or-nothing proposition?” she asked, suggesting there could be a “middle determination.”

“It’s not your job to make both of us happy,” Schachter said, prompting laughter from the judge about her job description.

The two sides disagree on whether a meeting of shareholders should have been called before Edward Rogers ousted five directors.

“That is the default mode of resolution throughout the (B.C. Corporations) Act,” McEwan told the court.

The son of late Rogers founder Ted Rogers claimed in an affidavit that he had the power to fire and appoint board members because he is chair of the Rogers Control Trust, prompting the feud with his mother Loretta Rogers and sisters Melinda Rogers-Hixon and Martha Rogers.

They are the respondent in the case and argue his board is illegitimate and the only valid board is the one that existed prior to his changes.

But McEwan said the respondent is seeking “to misdirect the fact” that the case is about an exercise of shareholder rights.

“It has filed evidence of what it asserts are best practices in Canadian corporate governance in an attempt to constrain or influence the statutory rights of shareholders,” he said.

“The respondent seems to distract from the simplicity of the issue before the court in that it goes so far as to attempt to invoke minority shareholder rights, suggesting they are compromised.”

The dispute has left the telecom company with two boards that each claim to be in power and has publicly pitted members of the Rogers family against one another amid negotiations to buy rival Shaw Communications Inc. for $26 billion, pending approval by regulators.

Loretta Rogers says in an affidavit filed Friday that the decision to oust her son as chairman of the board was an extremely difficult one for her and other family members after weeks of trying to work with him.

The family matriarch said she disagrees with her son’s portrayal of the facts in his affidavit and was misled about the reasons he wanted to fire CEO Joe Natale, who learned “by accident” that he was to be replaced by the chief financial officer.

She also said the move was “entirely inconsistent with the steps to be taken by the board when appointing a CEO” as her husband laid out in a memorandum to the board dated June 23, 2006.

Loretta Rogers said she disagrees with her son’s “personal view that he is entitled to exploit his entrusted position as control trust chair to circumvent Ted’s wishes, the interests of the Rogers family members and the governance structure that has allowed Rogers to become a successful public company despite family control.”

—Camille Bains, The Canadian Press

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