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Rogers says it won’t appeal court ruling in favour of Edward Roger’s board overhaul

Ruling is culmination of boardroom feud that has raged since September, splitting the Rogers family in the process

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Rogers Communications Inc says it will not appeal the Supreme Court’s decision that ruled in favour of the late founder’s son, Edward Rogers, to constitute a new board.

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A judge in British Columbia’s Supreme Court ruled on Friday that Edward was permitted to reconfigure the board at the stroke of a pen and seat five independent directors of his own choosing.

“I am granting the order sought by Edward,” said Justice Shelley Fitzpatrick.

On Sunday the telecom issued a brief statement saying it will not appeal the Court’s decision which handed Edward a big victory in a dispute that pitted him against his mother and sisters and has weighed on the stock.

After the decision was announced Friday Edward’s mother Loretta and sisters Melinda and Martha, who opposed his board overhaul, issued a lengthy statement saying they are “very disappointed” with the outcome.

It “represents a black eye for good governance and shareholder rights and sets a dangerous new precedent for Canada’s capital markets by allowing the independent directors of a public company to be removed with the stroke of a pen,” the statement said.

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“We believe that today’s ruling also ushers in a particularly dangerous time for RCI. The company now faces a very real prospect of management upheaval and a prolonged period of uncertainty, at perhaps the worst possible time.”

They also argued that doing what Edward had done was against the wishes of his later father, company founder Ted Rogers.

The board and family feuds were instigated when Edward attempted to replace company CEO Joe Natale.

Edward said he had lost confidence in Natale’s performance, with Rogers Communications trailing the mobile operations of rivals Bell and Telus, and was concerned about his ability to shepherd the integration of Shaw.

Sources close to the situation have expressed concern that Edward overhauled the board to set the stage to get rid of the CEO after his mother, sisters, and most of the company’s independent directors opposed his efforts to replace Natale with the company’s chief financial officer in September.

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In a statement Friday night, Edward Rogers said Natale “remains CEO and a director of Rogers Communications and has the Board’s support.”

He added that the company’s focus “must be on the business, a return to stability, and closing our transformational merger with Shaw Communications.”

During a hearing Monday in the B.C. court, lawyers for Edward had argued that, as chair of the family trust through which his family controls 97.5 per cent of the company’s voting shares, he had the power under B.C. corporate law and the company’s articles to change directors through a written resolution and did not need to call a shareholder meeting.

The judge’s decision, which was accompanied by lengthy written reasons given to both sides, appears to have rejected arguments from the company’s lawyers, including that there is wording within the corporate articles that required a meeting of all shareholders before making such changes. The company had also argued that Edward’s reconstitution of the board was against the wishes of his late father, company founder Ted Rogers, who died in 2008, as expressed in a “memorandum of wishes” he left behind.

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  1. Former Rogers Communications Chairman Edward Rogers speaks to shareholders during the Rogers annual general meeting in Toronto on April 20, 2018.

    Rogers ex-chair had power to form new board, lawyer argues as family feud reaches court

  2. How uniquely corporate governance matters can play out at Rogers was already apparent in 2006.

    ‘It’s the founder’s way or the highway’: Governance at Rogers has raised eyebrows before

  3. Lawyer Ken McEwan, who is representing former Rogers Communications chairman Edward Rogers, walks into the B.C. Supreme Court in Vancouver Monday.

    Decision on Rogers family feud could come as early as Friday

In his affidavit filed in advance of this week’s court hearing in B.C., Edward said the 10 out of 11 board directors including his mother and sister Martha initially supported the departure of the CEO. But John MacDonald, the company’s lead director, who became chair after Edward was dismissed from that role in the aftermath of the Natale affair, countered in his affidavit that the CEO’s resignation was presented to most of the board as a fait accompli. They had not lost confidence in Natale’s performance, and initially approved his resignation and a compensation package only because it had been presented to them as something he had wanted.

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A couple of days later, the board, including four independent directors who had initially voted in favour of Natale’s resignation, voted instead to remove Rogers’ CFO Tony Staffieri, Edward’s choice for CEO. A few weeks later, they ousted Edward as chair of the board.

Edward responded by saying he had lost faith in the directors. He removed five independent directors by written resolution and replaced them with his own picks — Jack Cockwell, Michael Cooper, Jan Innes, Ivan Fecan and John Kerr. According to Edward, they then met Oct. 24 and elected him chair.

The company insisted that old board remained intact including independent directors John MacDonald, Bonnie Brooks, John Clappison, Ellis Jacob and David Peterson, and argued that Edward’s board was “invalid.”

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In his statement Friday evening, Edward Rogers added that he took “no joy” in Friday’s court decision, or the events of the past weeks.

“The judgment confirms I acted appropriately,” he said, adding that Rogers “requires an effective board that shares a strategic vision for the business, is open, deliberate, consistent in its decision making, independent of management, and that always acts in the best interests of the corporation.”

Edward said he hopes his family can resolve their differences in private.

“Our family has disagreements like every other family,” he said. “I know every member of our family wants the brightest future for Rogers Communications.”

Rogers Communications issued a brief statement Friday evening confirming that the valid board of company is the one Edward put forward, and that he is its chair.

Additional reporting by Reuters

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