We recently wrote about new law in BC that restricts public access to the names of corporate shareholders. We decided to start testing the law on access to shareholders’ names, starting with a company relevant to our allies: EnCana Corporation. The company’s evasive response demonstrates that the new law is a major hurdle to corporate activism. To us, that’s just a red flag, so we’re going to tackle this issue in the coming weeks.
Some quick background: until this year in British Columbia, the public was allowed to obtain, on request, at no charge, and for any purpose, a copy of a corporation’s list of shareholders. Journalists often used this right of access to research ownership of a company. And activists could use it to learn who controls a company carrying out, for example, damaging resource development.
The new BC Business Corporations Act changed that. Now, if you want to obtain a list of shareholders, you must make a statutory declaration swearing to use the list only for corporate purposes, the broadest of which is to influence the voting of shares at a company meeting. The document must be signed by a lawyer or notary. You then take this declaration to the company’s records office, where you can inspect the register and make copies. What’s more, unless you are a shareholder, you need to pay fees: $10 per day to inspect the register, and a separate fee of $0.50 per page for copies.
Keep in mind: companies are required by law to maintain these lists. There is no question of inconvenience to the company in producing a list; they simply have to show it to you.
So to the EnCana story. The chain of events goes as follows:
On 8 September, I called EnCana’s public affairs line in Calgary, and left a message requesting a copy of the list shareholders.
On 9 September, a representative called me back. She said the company does not give out this information, and asked why I wanted it. I explained that we work with people who would like to encourage Encana to change some of its practices and policies, and who would like to communicate with those who control the company.
The spokesperson referred me to Linda McKid, EnCana’s Corporate Secretary, at 403.645.4697.
I called Linda, who told me, “we don’t give out a list of major shareholders”. I insisted that we have a right of access to the register of shareholders, and she passed me on to Frances van der Basch, EnCana’s transfer agent.
I called Frances at 403.232.2368, and was told I’d need to fill out a statutory declaration in the form set out in the “Alberta Corporations Act”, and send it to her.
This was interesting. Although I knew the company was not based in BC, so this attempt to gain information would not specifically test the BC Business Corporations Act, I had assumed Encana was a federal company. The rules for shareholder lists in the new BC Act are based on those in the federal Act, so this project would be equally instructive for activists concerned about BC-based companies and about national companies operating in BC.
I had been told that Alberta’s corporate law allowed unrestricted access to shareholder lists. As it turns out, that isn’t true. Alberta also has a Business Corporations Act, with similar rules for access to shareholder lists: a statutory declaration, and payment of a fee. In Alberta’s case it is up the company whether to charge a fee, but the Act stipulates it be a “reasonable fee”.
On September 9, 2004, Arthur Caldicott of Dogwood Initiative faxed Ms van der Basch a statutory declaration that I witnessed, as a notary. Arthur requested the list of shareholders, and swore to use it only influence the voting of shareholders, and other purpses set out in the Alberta Act (which mirror those in the federal Act). The declaration reminded the company it has 10 days to provide the list.
On September 13, I learned that EnCana is a federal company. Since the declaration doesn’t need to refer to the Alberta legislation, it only needs to affirm the uses to which the list would be put, I concluded the request would still be valid. To check, I called Frances van der Basch on September 13 to verify her receipt of the request.
Ms van der Basch called me on September 14, to say that the company had informed her it would not comply with the request, since it referred to the Alberta legislation. (It wasn’t clear whether the company would have responded at all, if not for my call, since they hadn’t bothered to do so yet.)
I pointed out that the substance of the declaration was the same for the federal Act as for the Alberta legislation, but Ms van der Basch, as a go-between, was unable to respond to this point.
She then went on to relay EnCana’s real bombshell: the “reasonable fee”. In this case, the fee is $6,000. This fee, apparently a base amount, can go higher, depending on the size of the shareholder list: EnCana charges a fee of 15 cents per name, plus some charge for the paper, plus GST. All for a list the company is required to keep, and need only print out, or copy.
I pointed out that the fee is an offence to anyone’s definition of “reasonable”. Ms van der Basch tried to ameliorate the situation by saying the list doesn’t tell that much anyway, since many of the most powerful shareholders are institutional investors who hold their shares through brokers. Approximately half of EnCana’s shares are held this way, apparently, masked by a depository service.
So how’s that for public access to corporate information? Anyone who has looked at the origins of corporations (for a brief primer, see the movie The Corporation) cannot help but feel outraged by this secrecy over corporate ownership. Corporations are accountable only to one principle: profit for their owners, the shareolders. That’s why, as the documentary points out, corporations act like psychopaths.
Individual shareholders, and even institutional shareholders, are accountable to a broader set of principles. At least, most of them are. Corporate attempts to hide the identities of their shareholders make it difficult to bring corporate conduct to the attention of the people who might be able to make a difference. It is a major barrier to activism, especially in a province like BC, in which so much of the land base is tied up in licences held by corporations.
We are now going to take this to the next step. First, we are writing to EnCana to formally request the reasons for the rejection of the request, and to ask for a detailed justification of the fee. Then we will resubmit the request, ensuring EnCana can’t reject it on technicalities, and will challenge the fee. If we need to make this a test case, we are prepared to do so. We’ll keep readers of the Dogwood Bulletin apprised as the tale continues.