SCHEDULE: Court Validates MILFAM's Director Nomination for Scully Royalty

The Grand Court of the Cayman Islands ruled that MILFAM LLC's director nomination for Scully Royalty Ltd. was valid and compliant.

Summary

• The Grand Court of the Cayman Islands issued an Order on December 19, 2025, declaring MILFAM LLC's director nomination notice for Scully Royalty Ltd. as valid.
• The court found that MILFAM's Notice of Director Nomination, dated November 25, 2025, was delivered within the specified time period and complied with Article 20.2 of Scully Royalty Ltd.'s Amended and Restated Memorandum and Articles of Association.
• Scully Royalty Ltd. (the Defendant) is ordered to pay MILFAM LLC's (the Plaintiff's) costs incurred by the Originating Summons.
• Neil S. Subin, as President and Manager of MILFAM LLC and trustee for various trusts, is deemed the beneficial owner of 1,985,952 common shares, representing 13.0% of Scully Royalty Ltd.'s outstanding shares.
• MILFAM LLC itself is deemed the beneficial owner of 1,957,597 common shares, representing 12.9% of the outstanding shares.
• The total common shares outstanding for Scully Royalty Ltd. as of November 24, 2025, were 15,226,351.

Sentiment

Score: 7

Explanation: The ruling is a clear legal victory for the activist shareholder group (MILFAM LLC), affirming their right to nominate directors and potentially influence the company's future. This is generally positive for the activist and other shareholders seeking change, though it introduces uncertainty for existing management.

Positives

• MILFAM LLC's director nomination notice was legally validated by the Grand Court, affirming its right to nominate directors.
• Scully Royalty Ltd. is ordered to pay MILFAM LLC's legal costs, shifting the financial burden of the dispute.

Negatives

• Scully Royalty Ltd. lost the legal challenge regarding the validity of the director nomination, indicating a setback for current management.
• The company is now liable for MILFAM LLC's legal costs associated with the Originating Summons.

Risks

• The validation of MILFAM LLC's director nomination could lead to changes in Scully Royalty Ltd.'s board composition and potentially its strategic direction.
• Ongoing legal disputes or further shareholder activism could create uncertainty for the company's operations and stock performance.

Future Outlook

The filing does not provide explicit forward-looking statements or guidance beyond the immediate legal outcome. The validation of the director nomination suggests potential future changes in corporate governance and strategic direction, but no specific outlook is detailed.

Industry Context

This event highlights the increasing trend of shareholder activism, where significant investors like MILFAM LLC actively challenge company management and corporate governance structures to influence strategic decisions and potentially unlock shareholder value. Such legal victories for activist shareholders can embolden other investors to pursue similar actions, particularly in companies where governance or performance is perceived as suboptimal.

Comparison to Industry Standards

• This legal ruling pertains to corporate governance and shareholder rights, rather than financial or operational performance, making direct comparisons to industry-specific financial benchmarks or project results (e.g., revenue growth, EBITDA margins, production rates) not applicable.
• The outcome reflects a successful exercise of shareholder rights, which aligns with broader trends in corporate governance emphasizing transparency and accountability, though specific comparable cases would depend on the unique circumstances of each company's articles of association and jurisdiction.

Corporate Governance

Legal Proceedings

• The Grand Court of the Cayman Islands, Financial Services Division, in Cause No: FSD 359 of 2025 (NSJ), ruled in favor of MILFAM LLC against Scully Royalty Ltd.
• The court declared MILFAM LLC's director nomination notice dated November 25, 2025, as valid and compliant with Scully Royalty Ltd.'s Articles of Association.
• Scully Royalty Ltd. is ordered to pay MILFAM LLC's legal costs related to the Originating Summons.

Stakeholder Impact

• **Shareholders (MILFAM LLC and affiliates):** Gain significant leverage in corporate governance, increasing their ability to influence board decisions and company strategy.
• **Other Shareholders:** May view this as a positive step towards improved governance and potential value creation through activist intervention.
• **Current Management/Board of Directors:** Face increased pressure and potential challenges to their authority and strategic plans due to the validated director nomination.
• **Creditors/Suppliers/Customers:** Indirect impact, as potential changes in company strategy or leadership could affect business relationships, though no immediate direct impact is detailed.

Next Steps

• MILFAM LLC will likely proceed with its director nomination, potentially leading to a shareholder vote or board changes.
• Scully Royalty Ltd. will need to comply with the court order regarding the director nomination and payment of costs.

Key Dates

Recommendation

The court's validation of MILFAM LLC's director nomination is a significant win for an activist shareholder group. This outcome increases the likelihood of board changes and potential strategic shifts aimed at unlocking shareholder value. For investors who believe in the activist's agenda to improve governance and performance, this development is a strong positive signal, suggesting a 'buy' recommendation as it paves the way for potential value-accretive actions.

Keywords

Scully Royalty Ltd., MILFAM LLC, Director Nomination, Shareholder Activism, Corporate Governance, SEC Filing, Schedule 13D, Cayman Islands Court, Legal Ruling, Beneficial Ownership