Court Orders Vote on Proposals to Replace Board of Economical

TORONTO, April 6 /CNW/ - VC & Co. Advisory Limited announced today that Economical Mutual Insurance Company has been ordered to proceed with a vote of its mutual policyholders on proposals to replace Economical's board of directors.

The decision, by Justice John Cavarzan of the Ontario Superior Court of Justice, was issued earlier today and followed a three-day hearing last month.  In his decision, Justice Cavarzan cited the well-established principle that Economical should be directed by the will of the majority of its mutual policyholders.

Court Decision Supports Policyholders' Right to Change Board

"The Court's decision clearly supports the position of the more than 100 mutual policyholders who submitted the proposals, which is that the mutual policyholders are entitled to elect a board in which they have trust and confidence at the upcoming annual meeting," said Michael D. Woollcombe, Executive Vice-President of VC & Co. Advisory Limited. "The decision rejects Economical's position, which would have prevented mutual policyholders from being able to vote to replace the board."

The Court hearing was called after the current board of Economical, in January 2011, challenged the legality of proposals calling for its replacement.

"By commencing these legal proceedings, the current board was clearly attempting to avoid a vote on its leadership and to prevent mutual policyholders from exercising their fundamental ownership right to elect a board of their choosing.  While it is unfortunate that the current board chose to pursue this litigation against the interests of its own mutual policyholders, we are gratified that the Court has ruled that the proposals to remove the current board and elect a new board must go before the May 26, 2011 meeting for a majority vote by mutual policyholders," said Mr. Woollcombe.

"Today's Court decision represents another key step for mutual policyholders towards finally putting in place a board that has the skills, experience and commitment to properly govern Economical at this critical crossroads.  That new board will be committed to responsibly delivering full value to Economical's mutual policyholders in a transparent and timely manner that best serves the interests of the company and all its stakeholders, including its brokers, employees and retirees," Mr. Woollcombe continued.

Mutual Policyholders to Receive Dissidents' Information Circular Shortly

In the near future, all mutual policyholders of Economical will be receiving a detailed dissidents' information circular outlining the reasons why a change in the board is required as well as the names and relevant experience of the new, highly qualified and independent candidates who will be proposed for election to the board at the May 26, 2011 meeting.

The Court declined in its decision today to impose the procedural protections around the May 26, 2011 meeting that had been sought on behalf of mutual policyholders.  Mr. Woollcombe commented, "While we are disappointed by this aspect of the decision, we remain completely committed to ensuring that a fair proxy and voting process occurs in relation to the May 26, 2011 meeting such that the will of the majority is ascertained, and are considering all alternatives to ensure that occurs."

The Court also declined in its decision today to require Economical to place the proposal amending Economical's by-laws before the May 26, 2011 meeting.  However, that proposal is not required to allow mutual policyholders to replace the full board at the May 26, 2011 meeting.

SOURCE VC

For further information:

Michael D. Woollcombe
Executive Vice-President, VC & Co. Advisory Limited
416-947-1700
mwoollcombe@voorco.com

Media contact:

Alan Bayless
Client Partner, Longview Communications Inc.
604-694-6035
abayless@longviewcomms.ca

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