TORONTO (Reuters) - TransCanada Corp, under pressure from an activist hedge fund to overhaul its business, said on Wednesday its board adopted new bylaws that require advance notice of director nominations.
The company did not indicate if the move had anything to do with pressure from activist fund Sandell Asset Management Corp.
Many publicly listed companies have begun to adopt so-called advance notice bylaws that prevent activists or other investors from springing a surprise slate of board nominees at an annual meeting.
Along with other minor changes to bylaws around the quorum requirements at a shareholder meeting, Calgary, Alberta-based TransCanada also formalized the power of the chairman to adjourn any shareholder meeting at any point if appropriate in case of questions around the legality of proxy votes.
Although it is fairly accepted that the chairman of a company’s shareholder meeting has that power, it sounds like TransCanada is trying to enshrine the practice into its bylaws, said Brad Allen, whose firm Branav Shareholder Advisory Services advises boards and others on corporate governance practices.
“I think they are just trying to make it clear that they control the process and can stop a meeting any time they want,” he said.
Small, New York-based Sandell said in an open letter to the TransCanada board earlier this month that it believes the company is worth C$75 per share, about a third more than the current value.
The activist investor, which owns a 0.1 percent stake in the company, wants TransCanada to revamp the way it uses its master limited partnership (MLP), TC Pipelines LP, and move more assets into the MLP to boost shareholder returns.
Sandell is also calling on TransCanada to split its pipeline and power businesses into separate companies, allowing each segment to attract a more specialized investor base.
TransCanada called the hedge fund’s analysis “flawed,” adding that its current strategy is the best way to “deliver long-term value to investors.”
In September, people close to the matter told Reuters the Calgary-based company had emerged as a possible target of U.S. activist investors who viewed the C$39.5 billion pipeline operator as a break-up candidate.
Reporting by Euan Rocha. Editing by Andre Grenon