The government is proposing a legislative change that would require the Minister of Industry to give reasons for any rejection under the Investment Canada Act, whether initial or final. Presently, the Minister is only obliged to give written reasons in the event of a final rejection. As we saw in 2010, the Minister issued an initial rejection of BHP Billiton Ltd.’s bid for Potash Corp. and BHP then … Continue Reading
The recent commitment of the Canadian government to the enforcement of the Corruption of Foreign Public Officials Act marks a new period in foreign investment transactions and necessitates a re-evaluation of the legal due diligence strategies employed by financiers and prospective acquirers alike, as well as by issuers and other companies operating in foreign jurisdictions in general.
Corrupt practices can result in criminal charges, unlimited monetary penalties, reputational consequences, derivative shareholder claims and class actions, and may even undermine the rights and benefits to which a company is entitled in a foreign jurisdiction.
Due diligence conducted in advance of foreign … Continue Reading
There are a number of ways in which a MAC clause can be drafted. Typically, these provisions begin with a broad definition of the type of event that will constitute a “material adverse change” on the business or assets being acquired. This is often followed by a list of explicit “carve-outs” which designate the events that fall outside this definition. By negotiating the definition and carve out sections of the MAC clause, parties may allocate the risk of adverse changes to either the seller by including them in the definition of material adverse change, or to the buyer by explicitly … Continue Reading
One of the key questions in connection with the decision to adopt a poison pill, or shareholder rights plan, is whether the rights plan should be “shareholder-approved” or “tactical”. A shareholder approved plan is implemented for an extended period of time to serve as general protection against future unsolicited bids. A tactical plan, on the other hand, is adopted in response to a particular bid (or threat of a bid). Historically tactical plans typically had a term of less than six months and would not be submitted to shareholders for approval, though there have been recent instances in which issuers … Continue Reading
Our colleague Matthew Cumming recently discussed some of the most important considerations when choosing between a take-over bid and a plan of arrangement for the acquisition of a Canadian public company. But if you’re like many of our other friends to the South, perhaps you’re wondering, what exactly is a plan of arrangement?
The answer is pretty simple actually. A plan of arrangement is a feature in most Canadian corporate statutes that essentially lets a company carry out a transaction using a process designed by the company, as opposed to following the rather strict rules laid down for an … Continue Reading
In most acquisitions, the distance between signing and closing is measured in weeks, if not months. During this interim period the buyer’s ability to safeguard or control the target’s business is limited. This is an uncomfortable position that can be exacerbated if the transaction is consummated between strategic competitors or in a market with substantial volatility. Accordingly, this is a context in which astute counsel can provide significant value to clients through effective risk allocation. There are a number of contractual tools that can be employed to help mitigate the inherent risks during this gap period (i.e. indemnities, escrows, price … Continue Reading