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Canadian Pacific chairman quits after accidently making company American

CANADIAN Pacific Railway's chairman Gary Colter has resigned in disgrace after a date change of another director's resignation changed the citizenship of the ionic Canadian company, which is at the centre of the country's confederation in 1867.

Despite having achieved record second quarter year-on-year profits of US$300 million, the bungled mishandling of the resignation puts most of the directors in the US camp, thus making CP an American company for tax purposes.

The sudden resignation of Mr Colter and another board director, Krystyna Hoeg, comes as CP cited disagreements relating to corporate governance matters, reported American Shipper.

But the Wall Street Journal reported the decision resulted from the mishandling of another recent board director's resignation.

Mr Colter ordered the company to issue a press release announcing that Stephen Tobias resigned from the board on June 29, despite the fact that Mr Tobias didn't notify Mr Colter of his plans until July 3, according to a statement from the railway.

This may seem like a small detail, but because Mr Tobias is a US citizen, the exact date of his resignation makes a difference to how the US Securities and Exchange Commission classifies the company. The composition of the board on June 30 is a determining factor as to whether the SEC treats CP as a Canadian or US company.

"Because Mr Tobias was a continuing director of the company through June 30, a majority of CP's directors were US citizens, and thus CP is no longer eligible for the SEC's Foreign Private Issuer Exemption and will become a US Issuer beginning in 2016," the company said.

Further, CP will no longer be exempt from the regular SEC reporting requirements in 2016 because a majority of its board was comprised of US citizens or residents as of June 30.

"Accordingly, CP plans to follow the regular SEC reporting requirements effective January 1, 2016, file an annual report on Form 10-K for the year ended December 31, 2015 and file regular periodic reports under both Canadian and US law thereafter."