TCI Funds Raises Serious Concerns About Integrity of Canadian National Board and Its Commitment to Good Corporate Governance

Questions Egregious Breach by CN of Timely Disclosure Regarding Julie Godin's Resignation from Company Board of Directors

LONDON, Sept. 29, 2021 /PRNewswire/ -- TCI Fund Management Limited, on behalf of itself and as investment manager of long-term shareholders CIFF Capital UK LP and The Children's Investment Master Fund (TCI Fund Management Limited, CIFF Capital UK LP and The Children's Investment Master Fund are referred to collectively as "TCI"), today delivered the following letter to the Board of Directors (the "Board") of Canadian National Railway Company (TSX: CNR) (NYSE: CNI) ("CN" or the "Company") raising serious concerns about its integrity and commitment to proper corporate governance practices. 

Specifically, CN failed to disclose the material development that Julie Godin had resigned from the Board on September 16, 2021 in an appropriate and timely manner.  The full text of the letter is included below: 

Board of Directors
Canadian National Railway Company
935 de La Gauchetière Street West
Montreal
Quebec H3B 2M9, Canada

Attn: Robert Pace, Chairman of the Board

September 29, 2021

Dear Chairman Pace and members of the Board of Directors (the "Board") of Canadian National Railway Company ("CN" or "Canadian National"). 

We believe the Board has been responsible for selective, inconsistent and potentially misleading disclosure of information.

It has come to our attention that Julie Godin, CN's youngest female director, resigned from the Board on September 16, 2021 - the same day TCI formally requisitioned a special meeting to replace four Board directors, and the day before CN announced its new strategic plan.

Her resignation and CN's failure to publicly disclose it by way of press release raise serious securities and corporate governance issues:

• CN did not immediately issue a press release to announce the resignation of Julie Godin from the Board as required. CN only posted a mention of her resignation on a webpage about board mandates and committee membership, which does not satisfy the requirement under applicable securities laws and stock exchange rules that material information be broadly disclosed.
• The lack of a public announcement of Julie Godin's resignation by way of a press release is a departure from CN's prior practice with regard to communicating changes to the board or senior management (see examples in Appendix A). We note that CN issued a press release on April 25, 2017 when Julie Godin joined the Board.
• The failure to issue a press release is even more serious and the information about the departure of a board member is even more material in the context of a public announcement on September 13, 2021 by us regarding the composition and performance of the Board and a requisition being made for a special meeting of shareholders, and a strategic plan having been approved by CN in the same time frame.
• On September 17, 2021, in its press release announcing its strategic plan, CN specifically mentioned adding two new directors in 2021 and the retirement of the Board Chair, but made no mention of Julie Godin's resignation. This shows a deliberate lack of transparency and a selective approach to disclosure with respect to governance matters.
• The resignation notification posted to CN's website seems to have been created on September 24, 2021, more than a week afterJulie Godin resigned, with CN having announced its strategic plan and holding calls with market participants on September 17, 2021 and thereafter.
• Julie Godin's departure clearly conflicts with claims of Board progress and unity.
• The Board has been unable to maintain its target of 10 independent directors.

In summary, the manner in which Julie Godin's resignation was dealt with, including the failure to inform the market by way of press release in a timely manner, especially in the existing context, raises serious questions about the integrity of the Board and its commitment to good corporate governance.

Furthermore, this conduct is another example in a long list of corporate governance failures at CN and illustrates why urgent change to the Board and leadership is necessary to put CN back on track. 

TCI has serious concerns about this failure to disclose and intends to report Canadian National to the relevant Canadian securities regulators and stock exchanges today.

Yours sincerely,

About TCI Fund Management

Founded in 2003 by Sir Christopher Hohn, TCI Fund Management Limited, the investment manager of CIFF Capital UK LP and The Children's Investment Master Fund, is a value orientated, fundamental investor which invests globally in strong businesses with sustainable competitive advantages. Using a private equity approach, TCI Fund Management Limited conducts deep fundamental research, constructively engages with management and adopts a long-term investment horizon. For more information on TCI Fund Management Limited and its ESG policy, visit www.tcifund.com/ESG

Disclosures

TCI has been a CN shareholder since 2018. TCI currently owns more than 5% of the shares outstanding (valued at $4.3 billion) and is committed to the long-term success of CN.

Contacts

Kingsdale Advisors:
Ian Robertson
President, Canada
Direct: 416-867-2333
Cell: 647-621-2646
Email: irobertson@kingsdaleadvisors.com

Hyunjoo Kim
Director, Communications, Marketing & Digital Strategy
Direct: 416-867-2357
Cell: 416-899-6463
Email: hkim@kingsdaleadvisors.com

TCI Media Contacts:
ASC Advisors, New York
Steve Bruce: sbruce@ascadvisors.com 
Taylor Ingraham: tingraham@ascadvisors.com 
203-992-1230

Information in Support of Public Broadcast Solicitation

The information contained in this news release does not and is not meant to constitute a solicitation of a proxy by TCI within the meaning of applicable corporate and securities laws. Although TCI has requisitioned a meeting  (the "Special Meeting") of the shareholders of CN for the purposes of refreshing the Board, there is currently no record or meeting date and shareholders are not being asked at this time to execute a proxy in favour of TCI's nominees or any other resolutions set forth in the requisition. In connection with the Special Meeting, TCI has filed a preliminary information circular dated September 27, 2021 (the "Circular") and expects to issue a supplement thereto or amendment and restatement thereof (the "Final TCI Circular") containing further disclosure concerning TCI's proposals, together with additional details concerning the completion and return of forms of proxy and voting information form ("VIF") to be provided by TCI for use at the Special Meeting.

Notwithstanding the foregoing, TCI is voluntarily providing the disclosure required under sections 9.2(4) and 9.2(6) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with corporate and securities laws applicable to public broadcast solicitations.

This news release and any solicitation made by TCI in advance of the Special Meeting is, or will be, as applicable, made by TCI and not by or on behalf of the management of CN.

Shareholders of CN are not being asked at this time to execute proxies in favour of TCI's nominees (in respect of the Special Meeting) or any other resolution that may be set forth in the requisition. TCI intends to make its solicitation primarily by mail, but proxies may also be solicited personally by telephone, email or other electronic means, as well as by newspaper or other media advertising or in person, by TCI, certain of its members, partners, directors, officers and employees, TCI's nominees or TCI's agents, including Kingsdale Advisors, who has been retained by TCI as its strategic shareholder advisor and proxy solicitation agent. Pursuant to the agreement between Kingsdale Advisors and TCI Fund Management Limited, Kingsdale Advisors would receive a fee of up to $3.5 million, plus customary fees for each call to or from shareholders of CN, and would be reimbursed for certain out-of-pocket expenses, with all such costs to be borne by TCI. In addition, TCI may solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, by way of public broadcast, including press release, speech or publication, and in any other manner permitted under applicable Canadian laws. Any members, partners, directors, officers or employees of TCI and their affiliates or other persons who solicit proxies on behalf of TCI will do so for no additional compensation. The costs incurred in the preparation and mailing of the Circular and the Final TCI Circular, and the solicitation of proxies by TCI will be borne by TCI, provided that, subject to applicable law, TCI may seek reimbursement from CN of TCI's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful reconstitution of the Board.

TCI is not requesting that CN shareholders submit a proxy at this time. A registered shareholder of CN who has given a proxy may revoke the proxy at any time prior to use by:

(a)  depositing an instrument or act in writing revoking the proxy, executed or, in Quebec, signed by such registered shareholder or by his, her or its personal representative authorized in writing or by electronic signature or, if the registered shareholder is a corporation, by an officer or attorney thereof properly authorized, either: (i) at the registered office of CN at any time up to and including the last business day preceding the day of the Special Meeting or any postponement(s) or adjournment(s) thereof, at 935, rue de La Gauchetière ouest, Montréal, Québec, Canada, H3B 2M9; or (ii) with the chairman of the Special Meeting prior to commencement of the Special Meeting on the day of the Special Meeting or any postponement(s) or adjournment(s) thereof; or

(b)  revoking the proxy in any other manner permitted by law.

A non-registered shareholder may revoke a form of proxy or VIF given to an intermediary or Broadridge Investor Communications (or any such other service company) at any time by submitting another properly completed form of proxy or VIF, as the latest form of proxy or VIF will automatically revoke any previous one already submitted, or by written notice to the intermediary in accordance with the instructions given to the non-registered shareholder by its intermediary.

Based on information provided to TCI by each respective nominee, none of TCI's nominees, nor any of their associates or affiliates, has had any material interest, direct or indirect, in any transaction since the commencement of CN's most recently completed financial year or in any proposed transaction which has materially affected or would materially affect CN or any of its subsidiaries.

Based on information provided to TCI by each respective nominee, none of TCI nor any member, partner, director or officer of TCI, nor any of TCI's nominees, nor any associates or affiliates of the foregoing, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in the matters currently known to be acted upon at the Special Meeting, other than in respect of TCI's ownership, control or direction of an aggregate of 36,699,825 common shares of CN, and the removal of certain incumbent directors and the election of the nominees as directors of CN.

CN's registered office address is 935, rue de La Gauchetière ouest, Montréal, Québec, Canada, H3B 4M9. A copy of the Circular which contains the information required by Form 51-102F5 Information Circular in respect of each of TCI's nominees may be obtained on CN's SEDAR profile at www.sedar.com.

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SOURCE TCI Fund Management Limited