Pro Tip: Don't sign a document if you intend to deny the facts later

A Dummies Guide to what actually happened at Brookfield last month

When you’re in minor political crisis, the tendency is to sluff it off and hope that the media and Opposition parties move on to the next brush fire.

I doubt anyone on Mark Carney’s campaign team recommended it, but he would have been better off borrowing the famous Jack Nicholson “You can’t handle the truth” line. That would have been superior to whatever damage control they’re trying to do regarding his role as Board Chairman when Brookfield Asset Management (BAM:TSX) moved its head office from Toronto to New York last Fall.

Mr. Carney’s December 1/24 signature is on a publicly-available document which clearly acknowledges that the HQ had moved to the USA prior to his resignation as a Director in January 2025:

This is an excerpt from page 27 something called a Management Information Circular outlining some sensible technical changes that were being sought from BAM shareholders. Elsewhere in that same document, dated December 1/24, Mr. Carney laid out some of the key topics under discussion:

Earlier in 2024, on March 19th to be precise, the HQ was still at 181 Bay Street in Toronto, according to the AIF filed with the Ontario Securities Commission:

All of which is proof that, at some point between March 19th and December 1, 2024, the headquarters officially moved —at least as far as the company’s regulators are concerned.

Instead of dissembling during the Liberal Leadership debate, Mr. Carney should have just been frank. Canadians would be better served if they understood (see prior post “Some Canadian Billionaires aren't waiting for sanity to return” Dec 28-24) why a great Canadian company would need to move its headquarters – and it had nothing to do with President Donald Trump.

If you’ve never heard of Brookfield Corp. (Brookfield) previously, BAM’s parent, that’s most unfortunate. Brookfield’s history dates back for decades, and it’s Canada’s most successful global asset manager. My Yahoo Finance chart only goes back to December 1994, but if you’d invested in the firm back then, you’d be up about 6,000% to date.

That’s a far better return than Warren Buffet’s Berkshire Hathaway (BRK.A:NYSE), or any of the Dow Jones, NASDAQ or S&P 500 indices, over the same period. Low profile, savvy, tough, worldly stewards of capital — exactly what you’d expect of some of Canada’s best investors.

One of the luxuries of the Canadian stock market is that whenever our listed companies publish something, it must be in the spirit of “Full, True and Plain Disclosure.” This can be a subjective test, but for our purposes, it seems necessary to explain what did and didn’t happen at last month’s Brookfield Asset Management (BAM:TSX) shareholder meeting.

Before we get to that, the story started on October 31, 2024, when Brookfield Corp. — as majority owner of BAM’s shares — announced (with a dateline of New York) three things under the headline “Brookfield Announces Steps to Enhance Corporate Structure and Broaden Shareholder Ownership of Brookfield Asset Management”:

· BAM headquarters had already been moved from Toronto to New York (“BAM has now changed its head office to New York”)

· certain amendments to the share structure of BAM via a Plan of Arrangement (a legal process that businesses often engage in when material changes are being made, such as a merger or amendments to the Articles of Incorporation; an Arrangement requires Court approval to become effective)

· a shareholder vote to be held on Dec. 20/24 regarding “the Arrangement”

On December 1, 2024, Brookfield Asset Management issued something called a Management Information Circular. This 165 page document, signed by Mark Carney in his capacity as Board Chairman (see images above), outlined some simple technical legal changes that Brookfield (the majority owner of BAM) wanted to make to the ownership share structure of BAM. This required the support of 2/3rds of BAM’s existing shareholders, and would be enacted by a B.C. Court-approved “Plan of Arrangement.”

The benefits of the technical share restructuring were compelling:

The Arrangement simplifies the corporate structure of the asset management business, making it easier for investors to understand and value the security. It will also enable BAM’s market capitalization to accurately reflect the total value of the asset management business. Today, that would be approximately $85 billion based on the current stock price of the BAM Class A Shares, compared to BAM’s current market capitalization of approximately $23 billion, which reflects only 27% of the asset management business.

Broader index inclusion is expected to drive increased ownership of the Class A Shares by passive institutional investors, who collectively manage trillions of dollars in capital. Further, inclusion in the most widely followed indices is expected to increase BAM’s visibility among a much broader universe of active public investors who benchmark against these indices.

Canada’s mail strike intervened, making it too risky to try to proceed with the shareholder meeting on December 20th — what if shareholders complained that they never got their materials? On December 27th, Brookfield announced a new meeting date: January 27th. The new press release outlined the two items that shareholders were being asked to vote on:

(i) a special resolution (the “Arrangement Resolution”) approving the Arrangement and

(ii) a special resolution increasing the number of directors of BAM from 12 to 14 (the “Director Increase Resolution”)

Shareholders were NOT being asked to vote on the move of BAM’s headquarters from Toronto to New York (per the circular signed by Mr. Carney, “BAM’s head office is located at Brookfield Place, 250 Vesey Street, 15th Floor, New York, New York, 10281-0221, United States.”).

By law, the press release reflected the “Full, True and Plain Disclosure” of what was being voted on at the January 27, 2025 meeting, and I’d like to think this isn’t open to interpretation. No where in the materials can I find any suggestion that the move was part of the “Arrangement” being voted on. Had shareholders not voted in favour of these two items, the HQ move from Toronto to New York — as previously announced on October 31, 2024 and reflected in the Dec1/24 public filing — would have been unaffected.

On February 4, 2025, again with a New York dateline, Brookfield announced “the completion of the previously-announced arrangement to enhance BAM’s corporate structure and broaden shareholder ownership (the ‘Arrangement’). The Arrangement was approved by BAM shareholders at a special meeting held on January 27, 2025. The Supreme Court of British Columbia issued a final order approving the Arrangement on January 30, 2025.”

No mention was made of the HQ move to New York becoming effective as part of the vote, despite what Team Carney might be telling the media.

Having said that he wasn’t involved when the headquarters move actually took place, Mr. Carney’s seemingly denied the existence of a document that he signed on December 1, 2024. Unlike telling a fib during a leadership debate, every public company has an army of lawyers who ensure that everything filed on its behalf is the truth.

If not, folks get fired and regulatory fines must be paid.

Mr. Carney has plenty of volunteers on his campaign team with capital markets experience; they know this stuff cold. Going forward, he’s going to find it challenging to rely on Justin Trudeau’s team of senior advisors — who showed a deftness for getting their boss off the hook using the “he said, she said” defence — if they think that old playbook will work when so much of Mr. Carney’s track record is out there for all to see.

MRM

(this post, like all blogs, is an Opinion Piece)