Sandpiper Calls the Tune – Ontario Court Examines Shareholder Meeting Timing Requirements

How much time can a board take to convene a requisitioned meeting of securityholders? The recent decision of the Ontario Superior Court of Justice in Sandpiper Real Estate Fund 4 Limited Partnership v. First Capital Real Estate Investment Trust provides guidance to board members both as to how contextual factors may inform the decision and as to the process boards should undertake in addressing the question.


The case arose from a meeting requisition delivered on December 12, 2022 to First Capital by Sandpiper entities that together beneficially owned approximately 9% of First Capital’s outstanding units. The requisition was made in the wake of First Capital’s announcements of an enhanced capital allocation and portfolio optimization plan, and of the first asset disposition under the new plan. Sandpiper’s requisition sought a special meeting of First Capital unitholders to be held not later than March 1, 2023 to replace four members of the board with Sandpiper nominees. First Capital’s board of trustees announced that the special business specified by Sandpiper would be addressed at First Capital’s annual general meeting to be held May 16, 2023, approximately two and one-half months after First Capital’s requisitioned deadline and five months after the delivery of the requisition. Sandpiper indicated it would accept the longer timeline in exchange for an undertaking to postpone implementation of the optimization plan, but First Capital refused.

The question of how quickly boards must convene securityholder meetings is not prescribed by applicable corporate legislation (except in British Columbia) or in the organizational documents of non-corporate issuers (like First Capital) that typically parrot the corporate law framework. Corporate statutes require only that the meeting be called within a specified period, but leave open the question of how quickly the meeting must actually be held.

The Decision

The Sandpiper decision frames its analysis by referencing jurisprudence that recognizes securityholders’ rights to have requisitions dealt with expeditiously, and requires that boards act reasonably with an appropriate degree of prudence and diligence.

The Court analyzed issues relating to the board’s process in assessing the degree of deference to be afforded to the board’s decision. On the basis that the board addressed the matter at a single two-hour meeting with other agenda items, with the directors proposed to be removed participating without any acknowledgment or consideration of their potential conflict, the Court concluded the board had not engaged in a scrupulous and diligent process and that consequently a high level of deference to the board’s judgment was not warranted.

As for the substance of the board’s action, the decision focused mostly on First Capital’s position that the delay was warranted to permit the optimization plan to further unfold. The Court concluded that, in the absence of a specific, anticipated event, which would better inform unitholders’ decisions, the general wish to permit the plan to further unfold was not a reasonable basis for delay, contrasting the situation with another case where a similar delay was permitted as the issuer was awaiting a pertinent tax ruling. First Capital’s position that two meetings would be costly and distracting was determined to be not persuasive for a well-capitalized and stable issuer such as First Capital.

Finally, the Court was not persuaded by First Capital’s argument that the delay would give unitholders more time. The decision weighs these factors against the prejudice from the longer period that would arise from the delayed oversight of the optimization plan by the Sandpiper nominees. Ultimately the Court ruled that the meeting had to occur on the faster timetable, being March 1, 2023 or as soon thereafter as 2022 financial information could be timely delivered to unitholders.

This timing issue cannot be fixed by simply amending corporate statutes to specify timelines. The appropriate timeline will, as the Sandpiper case demonstrates, be very fact-dependent, warranting an exercise of judgment. The issues addressed in the Sandpiper decision, from both process-oriented and substantive perspectives, will certainly be weighed heavily by boards facing this question going forward.

For further information on the Sandpiper decision or related matters, please contact any member of our Mergers and Acquisitions Group.