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Corporate Finance/M&A
Canada
In a move that could limit the options of potential acquirers and activist investors, while significantly increasing the paper burden for institutional investors and mutual funds, the Canadian Securities Administrators has proposed a significant expansion to the early warning obligations for investors in securities. The regulator aims to provide greater transparency and address concerns regarding hidden ownership and empty voting.
The Ontario Securities Commission (OSC) recently issued a cease-trade order in connection with Thirdcoast Limited's shareholder rights plan, or poison pill. The plan was adopted in response to an all-cash bid made by Parrish & Heimbecker Limited. It is clear that the OSC has affirmed the fundamental policy that a rights plan will be permitted only as a temporary measure to enhance shareholder value.
Cross-border perspectives on poison pills
A recent panel discussion on cross-border issues in mergers and acquisitions focused on the review of shareholder rights plans – also known as poison pills – in Canada and Delaware and the differing approaches taken by courts as compared with the securities regulators. This update provides highlights of the panellists' remarks.
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.
The Ontario Securities Commission (OSC) has released a highly anticipated decision in which it cease traded the proposed transaction to collapse the Magna International dual class share structure. The OSC determined that the disclosure provided to Magna's shareholders was insufficient to permit the shareholders to make an informed decision as to how to vote on the transaction.
