Ruling provides clarity on director ballots for TSX-listed firms

The Ontario Court of Appeal has ruled that withheld votes are to be counted as ballots against the election of a director for Toronto Stock Exchange (TSX) listed companies.

The appellate court’s decision in Baylin Technologies Inc. v. Gelerman 2021 ONCA 45 has overturned an Ontario Superior Court ruling in Baylin Technologies Inc. v. Gelerman 2020 ONSC 404, that found withheld votes were to be uncounted.

Speaking on the original case, Torys litigator James Gotowiec—who represented the TSX as an intervener in the appeal—told The Lawyer’s Daily that the application judge “muddied the waters a little bit on how withheld votes are to be considered”.

He added that the Ontario Court of Appeal “corrected that by providing some helpful clarity on how the majority voting policy is meant to be interpreted.”

REGISTER: Join Torys litigators for the latest edition of their Breakfast With Appeal series on March 23.

James also noted that the appellate court’s decision ensures that case law and the TSX Company Manual now correspond with each other.

“It’s helpful to no longer have that tension between what’s in the TSX Company Manual and what’s in the case law, and to make sure the approach being taken by the court is aligned with the TSX’s,” James said.

James added that The Ontario Court of Appeal’s ruling defined the use of exceptional circumstances, which the TSX states are “expected to meet a high threshold.”

You can read more appeals’ insights on the practice page.