Effective May 9, 2016, the Canadian Securities Administrators will implement new take-over bid rules that will introduce significant changes to bid mechanics, including lengthier minimum deposit periods. For a description of the changes, see here.
Rush to conflict: Hurried transaction fails after British Columbia court finds conflicts of interest
A recent court decision led to the failure of an attempted acquisition of an exploration company by a listed issuer, in part due to conflicts of interest. We analyze the decision, and provide commentary on the law and practice of managing conflicts, in this Dentons Insight.
This summary was co-authored by Daniel McElroy, Knowledge Management Lawyer in Dentons’ Vancouver office.
On November 28, 2012, the British Columbia Securities Commission (BCSC) issued the reasons for the decision it had made following a hearing to consider an application made by Inmet Mining Corporation for certain relief in connection with its hostile take-over bid for Petaquilla Minerals Ltd. The hearing had concluded with an unsurprising order to the effect that Petaquilla’s shareholder rights plan would be cease traded on a specified date unless Petaquilla waived the plan as against Inmet’s bid. What was less predictable was that the BCSC also cease traded a proposed private placement note financing by Petaquilla, unless Inmet did not purchase any Petaquilla shares under its bid.
Read full article here.
The Ontario Securities Commission (“OSC”) is currently considering two significant policy initiatives affecting mergers & acquisition transactions in Canada. As discussed in a previous post, the first initiative relates to a possible standalone rule in respect of poison pills. The second policy initiative discussed in the recent OSC panel discussion held at the Toronto Board of Trade would amend the existing rules governing related party transactions in order to address current “process defects” in conflict management and to provide additional protections for minority shareholders.
Under the draft proposal, an issuer contemplating a related party transaction would be required to establish a special committee of independent directors, which committee would be required to negotiate or supervise the negotiation of the transaction terms and evaluate the fairness of the transaction. The special committee would be required to either (i) recommend that the board support and that shareholders vote in favour of the transaction, or (ii) deem the transaction to be fair to shareholders notwithstanding that the special committee does not make a recommendation in favour of the transaction. The determination by the special committee would be supported by full disclosure regarding the committee’s procedure and reasoning. The new regime would also lower the transaction value triggering a shareholder vote from the current threshold of 25% of market capitalization of the issuer to 10% of market capitalization of the issuer.
According to Mr. Naizam Kanji, Deputy Director of Corporate Finance at the OSC, the proposal could also include a clarification and broadening of the scope of the definition of related party transactions.
Securities Commissions Seek Input on Application by Maple Group Acquisition Corporation to Acquire the TMX Group
On October 7, 2011, the Ontario Securities Commission (“OSC”) published a Notice and Request for Comment (the “Notice”) on the Application by Maple Group Acquisition Corporation (“Maple”), a consortium of Canadian investment dealers, pension funds and other institutional investors, to acquire TMX Group Inc., Alpha Trading Systems Limited Partnership, Alpha Trading Systems Inc., the Canadian Depository for Securities Limited and, indirectly, CDS Clearing and Depository Services Inc. Maple is proposing to create an integrated group of businesses that provide trading, clearing, settlement and depository services for a broad array of financial instruments. The Alberta and B.C. Securities Commissions have also published a Joint Notice and Request for Comment seeking input on the Application.
The Notice summarizes the Maple proposal, highlights key issues that may arise from the proposed acquisition and provides information about the comment process.
The comment period is open until November 7, 2011. The OSC intends to hold a policy hearing in December 2011 to give members of the public who have submitted written comments an opportunity to clarify or expand on their written submissions.