SCHEDULE: Scully Royalty Faces Shareholder Proxy Battle Over Board Seats

A significant shareholder group, led by Neil S. Subin and MILFAM LLC, is challenging Scully Royalty Ltd.'s board, nominating five directors and alleging false statements in a recent SEC filing.

Summary

• Neil S. Subin and associated entities, collectively holding 13.0% of Scully Royalty Ltd.'s common shares, have filed an Amendment No. 4 to Schedule 13D.
• The filing details a dispute with Scully Royalty Ltd. regarding the nomination of five new directors for the upcoming Annual General Meeting on December 27, 2025.
• MILFAM LLC, a key reporting person, nominated Jerrod Freund, Mark Holliday, Alan Howe, Nimesh Patel, and Skyler Wichers to the board.
• Scully Royalty Ltd.'s counsel, Sangra Moller LLP, sent a letter on December 5, 2025, challenging the validity of these nominations.
• Walkers (Cayman) LLP, counsel for MILFAM LLC, responded on December 7, 2025, asserting the nominations were valid under Article 20.2 of the company's Articles of Association.
• The reporting persons allege that Scully Royalty Ltd.'s Form 6-K, filed on December 5, 2025, contains a false statement by claiming no additional director nominations had been received.
• They demand that Scully Royalty Ltd. amend its Form 6-K and mail a corrected proxy statement to shareholders by the close of business on December 9, 2025.
• The reporting persons have engaged in preliminary discussions with other shareholders about removing existing board members and electing their nominees.
• They intend to continue communications with the Issuer and other shareholders to pursue changes that would increase shareholder value.

Sentiment

Score: 3

Explanation: The sentiment is largely negative due to the allegations of false statements, attempts at board entrenchment, and efforts to suppress shareholder participation. While shareholder activism can be positive, the current situation indicates significant internal conflict and governance issues.

Positives

• A significant shareholder group is actively seeking to improve corporate governance and potentially increase shareholder value through board changes.
• The reporting persons have clearly articulated their concerns and demands, providing transparency to other shareholders.

Negatives

• The company's current management is accused of making false statements in an SEC filing (Form 6-K) regarding director nominations.
• The current board is alleged to be attempting to entrench themselves and disenfranchise significant shareholders by challenging valid nominations.
• Concerns are raised about the timing and logistics of the Annual General Meeting (Saturday, December 27, 2025, in Hong Kong, without electronic attendance options) being designed to discourage shareholder participation.

Risks

• Potential legal action against Scully Royalty Ltd. if it fails to amend its Form 6-K as demanded by the reporting persons.
• Ongoing proxy contest and board dispute could create uncertainty and instability for the company.
• Risk of shareholder disenfranchisement if the company's actions impede valid nominations and participation in the Annual Meeting.
• Reputational damage to the company's current management due to allegations of false statements and attempts to entrench.

Future Outlook

The reporting persons plan to continue communicating with Scully Royalty Ltd. and other shareholders regarding board changes and other matters. They may take additional steps to bring about changes to the board and/or the Issuer that they believe would increase shareholder value, as well as pursue other plans or proposals related to the matters set forth in Item 4 of Schedule 13D.

Management Comments

• The company's statement in its Form 6-K that no additional director nominations were received is a false statement.
• The company is liable for any such false or misleading statements under the securities laws of the United States and Canada.
• The purported attempt by the company to declare the nomination notice invalid is a clearly cynical step by the directors to attempt to further entrench and enrich themselves.
• The directors should be encouraging participation and debate rather than attempting to disenfranchise members, particularly those with significant shareholdings.
• The proposals to convene the meeting on a weekend in Hong Kong between Christmas and New Year, and to not allow electronic attendance, are obviously designed to discourage members from attending.
• Serious concerns exist as to the motivations of the current directors and whether they are acting in the best interests of the company.

Industry Context

This filing highlights a growing trend of shareholder activism where institutional and significant individual investors actively challenge incumbent management and boards to drive corporate governance improvements and unlock shareholder value. Such disputes often arise when shareholders perceive a disconnect between company performance, strategic direction, and board accountability. The outcome of this proxy contest could set a precedent for how Scully Royalty Ltd. engages with its major shareholders and addresses governance concerns.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The reporting persons warn that Scully Royalty Ltd. is liable for any false or misleading statements under US and Canadian securities laws, implying potential legal action if the company fails to amend its Form 6-K.

Stakeholder Impact

• Shareholders: Potential for significant changes in board composition and strategic direction, which could impact share value. Risk of disenfranchisement for those unable to attend the AGM.
• Current Management/Board: Faces a challenge to their positions and reputation due to allegations of entrenchment and false statements.
• Regulatory Authorities: The allegations of false statements in an SEC filing could draw scrutiny from the SEC and Canadian regulators.

Next Steps

• Scully Royalty Ltd. is demanded to file an amendment to its Form 6-K and mail a corrected proxy statement by December 9, 2025.
• The Annual General Meeting of Shareholders is scheduled for December 27, 2025, where the nominated directors will be put forward for election.
• The reporting persons plan to continue communicating with the Issuer and other shareholders regarding these and similar matters.
• The reporting persons may take other steps to bring about changes to the Board and/or the Issuer to increase shareholder value.

Key Dates

Recommendation

The filing details a significant governance dispute and potential proxy fight at Scully Royalty Ltd. While the outcome is uncertain, the allegations of false statements and attempts to entrench the board are serious. Investors should hold their positions to observe the resolution of this conflict and assess the impact of any board changes before making further investment decisions. This is a situation of internal corporate struggle rather than a direct financial performance update, warranting a cautious 'hold' stance.

Keywords

Scully Royalty Ltd., Schedule 13D, Shareholder Activism, Proxy Fight, Board Nomination, Corporate Governance, SEC Filing, MILFAM LLC, Director Election, Shareholder Value