David George-Cosh

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Canadian National Railway Co. failed to properly disclose the dismissal of a board member earlier this month which constitutes an "egregious breach" of disclosure, according to the U.K.-based hedge fund leading an activist campaign against the railroad operator. 
 
TCI Fund Management Ltd. sent a letter to CN Rail's board on Wednesday criticizing the company for not immediately disclosing the departure of Julie Godin from its board on Sept. 16, stating that her resignation raises serious securities and corporate governance issues. 
 
TCI is embroiled in a month-long dispute against CN Rail's management and board following the railroad's failed takeover bid for Kansas City Southern earlier this month. The hedge fund, led by billionaire investor Chris Hahn, owns approximately 5.2 per cent of CN Rail's outstanding stock, making it the company's second-largest shareholder behind Bill Gates' Cascade Investment LLC.
 
Earlier in September, TCI requested a special shareholder meeting to address its concerns, including replacing CN Rail Chief Executive Officer Jean-Jacques Ruest with former CN Rail and Union Pacific executive Jim Vena, as well as proposing a slate of four new independent directors to the company's board.

TCI said Godin's resignation was not detailed in a company press release, which was the normal approach in previous director departures, and was only mentioned on a website about board mandates which the investor alleges does not abide by securities laws on how material information should be disclosed. 
 
"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," TCI said in a letter co-signed by Hahn and Ben Walker, a partner at the hedge fund.

A CN Rail representative said that Godin resigned as a company director to focus on expanding her role while chair of CGI Inc.

"Her resignation was posted on SEDI and our website in an appropriate and timely manner in accordance with relevant securities law," the spokesperson said.

CN Rail has yet to announce when it will hold its shareholder meeting and has until December to do so.

With files from BNN Bloomberg's Terry Cain