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Canadian Shareholder Activism Braces for Shake-Up with New Rules

The rise of shareholder activism in Canada is facing a reality check as a new law that gives investors greater power to nominate board members will be put to the test next month.

The law change, which came into effect in August, allows investors to vote "for" or "against" each director nominated to a company board. Previously, shareholders could only vote "for" a candidate or "withhold" their vote, meaning a majority was not legally required. Lawyers say the amendment will be tested for the first time in the upcoming proxy season, when activist campaigns from Luxor Capital Group and Sandpiper Group against Ritchie Bros Auctioneers and First Capital Real Estate Investment Trust will face the scrutiny of other investors. The increased activism is expected to increase transparency and drive stock performance.

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