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
"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
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.
For further information:
Michael D. Woollcombe
Executive Vice-President, VC & Co. Advisory Limited
Client Partner, Longview Communications Inc.