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Mr Michael T Waters Partner Borden Ladner Gervais LLP - Lawyer biography - International Law Office

International Law Office

Michael T Waters

Mr Michael T Waters

Published updates

Corporate Finance/M&A

The British Columbia Securities Commission recently defended the unusually long shelf life that it accorded to a poison pill in the face of a hostile takeover bid by releasing of reasons supporting its decision to allow Augusta Resource Corporation to leave its shareholder rights plan in place in the face of the HudBay Minerals Inc hostile bid for a total of 156 days.

The British Columbia Securities Commission has issued an order allowing Augusta Resource Corporation to leave its shareholder rights plan in place until July 15 2014 in the face of HudBay Minerals Inc's hostile bid. This order will be welcomed in circles where concerns have been expressed that takeover bid regulation in Canada has unduly favoured hostile bidders and contributed to the 'hollowing out' of corporate Canada.

The Canadian Securities Administrators has proposed a new rule governing shareholder rights plans – or 'poison pills' – that would provide target boards with the ability to delay a takeover bid unilaterally for a minimum of 90 days. If implemented, the proposed rule would likely make the process of completing a hostile bid in Canada more expensive and subject to considerably more uncertainty from the bidder's point of view.

Historically, it has been challenging for target boards in Canada to defend against hostile bids. In 2012 that challenge appeared to grow somewhat, but new rules expected to be proposed by the Ontario Securities Commission in 2013 might ultimately provide target boards with new powers to defend against these bids.

In a recent case the Ontario Securities Commission clearly rejected the proposition that securities commissions should defer to the business judgement of a target board of directors in deciding whether to cease trade a shareholder rights plan (also known as a poison pill). This decision should clarify some of the confusion arising from other earlier commission decisions.

The British Columbia Securities Commission (BCSC) released reasons of the majority of the panel supporting its decision to cease trade the Lions Gate shareholder rights plan. The BCSC held that a shareholder rights plan will be tolerated only where it provides a target board with additional time to seek an improved or alternative transaction. A plan may not be used as a 'just say no' defence to a takeover bid.


Mr Michael T Waters