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“Placeholder candidates”: an untested response to advance notice provisions

Posted in Canadian Market Entry, Public M&A, Shareholders, Strategy

Many US and Canadian public companies have implemented so-called advance notice provisions (“ANPs”), bylaws and policies requiring shareholders to provide a company with notice by a specified deadline should they wish to propose an alternative slate of directors at a shareholder meeting. Recently, a shareholder of a US company listed on the New York Stock Exchange ran out of time to provide the usual form of notice and instead nominated “placeholder candidates”. This article examines the novel and previously untested tactic of nominating “placeholder candidates” in proxy contests.… Continue Reading

Canadian Securities Commissions Consider First Tactical Private Placement Under Canada’s New Take-Over Bid Regime

Earlier today, the Ontario Securities Commission and the British Colombia Securities Commission released their decisions regarding Hecla Mining Co.’s claim that Dolly Varden Silver Corp. had planned to utilize a private placement as an inappropriate defensive tactic.

Posted in Public M&A, Shareholders, Strategy

Since Canada’s new harmonized take-over bid regime (New Bid Regime) came into effect earlier this year, there’s been a lot of talk about whether tactical private placements will become the new poison pills. For more information on the New Bid Regime see our previous article, Canada’s New Take-Over Bid Rules Seek to Level the Playing Field.

A “tactical private placement” occurs when a target company issues securities to a friendly party in response to an unsolicited take-over bid in order to make it more difficult and/or more expensive for the hostile bidder to complete a take-over of the target … Continue Reading

Thinking of Buying or Selling a Fintech Target? Due Diligence Issues Unique to Fintech M&A

Although many of the same considerations related to the acquisition or sale of any technology company apply, regulatory and compliance considerations are key in the fintech space.

Posted in Canadian Market Entry, Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

Fintech M&A activity, in both the Canadian market and globally, is expected to be on the rise over the next few years. In its 2016 Report, FinTech: Prepare for a Wave of M&A, UK-based investment bank FirstCapital, predicts that fintech M&A deal flow will increase “as financial incumbents look to catch up with widespread innovation from new entrants, the internet majors scale up in financial services and the technology/software majors add new technology to deepen their offerings in this sector”.

Like with the acquisition or sale of any technology company, strategic due diligence is a critical component of the … Continue Reading

Canada’s early warning rules get tougher in May

Canadian Securities Administrators adopt enhanced disclosure, retain 10% reporting threshold

Posted in Canadian Market Entry, Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

Along with the announcement on February 25, 2016 of final amendments to Canada’s take-over bid regime (see our February 26, 2016 publication, Canada’s New Take-Over Bid Rules Seek to Level the Playing Field, relating to that announcement), the Canadian Securities Administrators (CSA) published the text of final amendments to Canada’s Early Warning Regime (EWR), which will take effect on May 9, 2016.1

Background

The release of the amendments (EWR Amendments) brings to an end a three-year engagement by the CSA with market participants that began in March 2013 with an initial set of EWR proposals (see our March … Continue Reading

Canada’s New Take-Over Bid Rules Seek to Level the Playing Field

The Canadian Securities Administrators confirm the adoption of a harmonized Canadian take-over bid and issuer bid regime (including a 105 day minimum bid period), effective May 9, 2016

Posted in Canadian Market Entry, Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

On February 25, 2016, the Canadian Securities Administrators (CSA) published a CSA Notice of Amendments to Take-Over Bid Regime confirming the adoption of a harmonized take-over bid and issuer bid regime for all Canadian jurisdictions (New Bid Regime),1 effective May 9, 2016.2

On February 25, 2016, the CSA also published a CSA Notice of Amendments to Early Warning System, which confirms the adoption of changes to Canada’s early warning reporting (EWR) system. These changes to the EWR system are to come into effect at the same time as the New Bid Regime and will be reflected in … Continue Reading

Updated OECD Principles of Corporate Governance: Canada Continues to be Ahead of the Curve

Posted in Public M&A, Shareholders, Strategy

The OECD’s updated G20/OECD Principles of Corporate Governance (the “Principles”) highlight that core corporate governance principles are well embedded in the Canadian framework and that many of the new governance initiatives outlined in the Principles are already being pursued in Canada.[1] The Principles, first published in 1999 and previously revised in 2004, provide a widely accepted international reference point used by policymakers in setting corporate governance standards across the globe.… Continue Reading

Harnessing Social Media for Crisis Management: Lessons following recent events involving short seller allegations

Posted in Canadian Market Entry, Public M&A, Shareholders, Strategy

In October, 2015, short-sellers attacked three Canadian public companies: Valeant Pharmaceuticals International, Inc., DH Corporation and Nobilis Health Corp. All three companies refuted the short sellers’ allegations in traditional media. We suggest below that these companies could have also used social media to get their side of the story out. In our view, there was a potential opportunity to further influence market sentiment about allegations that had already negatively impacted secondary market trading.[1]Continue Reading

The 2016 Proxy Season: Updates to the ISS Canadian Proxy Voting Guidelines

Posted in Shareholders, Strategy

The following post on the Canadian Securities Regulatory Monitor blog may be of interest to readers of this blog:  The 2016 Proxy Season: Updates to the ISS Canadian Proxy Voting Guidelines.

On November 20, 2015, Institutional Shareholder Services Inc. (“ISS”) released its updated Canadian proxy voting guidelines for meetings on or after February 1, 2016.1 The updates provide new or updated guidance with respect to voting for equity compensation plans, electing directors with too many board appointments and electing directors of externally managed issuers such as REITs.  Read More

 … Continue Reading

Universal Proxies Coming to Canada? The CCGG Makes Its Case

Posted in Public M&A, Shareholders

In a recent policy statement, the Canadian Coalition for Good Governance (“CCGG”) endorsed the use of “universal proxies” whenever there is a contested director election at a Canadian public company. A “universal proxy” is a proxy voting form which lists all nominees for election regardless of who nominated them (whether management or dissident shareholder). Although there is nothing under corporate or securities laws which prohibits a company or a dissident from using a universal proxy,[1] it is common practice for Canadian issuers and dissident shareholders to solicit votes with the use of proxies which only list their … Continue Reading

Harnessing Social Media: Syngenta’s high-profile use in Monsanto bid

Posted in Canadian Market Entry, Public M&A, Shareholders, Strategy

In our two recent articles, available here and here, we outlined how social media can influence proxy contests and identified some potential legal challenges with this development. This update focuses on the recent use of social media in the high-profile (failed) hostile bid for Syngenta AG (“Syngenta”) by Monsanto Company (“Monsanto”).

Background

In May 2015, Monsanto made a $45 billion bid (its third bid in four years) for Syngenta. Syngenta’s board almost immediately rejected the offer on the grounds of anti-trust concerns and lack of protection for shareholders should the deal fall apart. The rejection … Continue Reading

Proxy Access In Canada: CCGG Proposals to Give Shareholders More Input Into the Director Nomination Process

Posted in Shareholders

 

The Canadian Coalition for Good Governance (CCGG) recently published a policy encouraging issuers to take measures to enhance “proxy access”, meaning the ability of shareholders to have meaningful input into the director nomination process. The CCGG published this policy in the midst of a surge of voluntary adoption of proxy access by significant issuers in the United States. As of the date of this publication, we are not aware of any Canadian issuer that has adopted proxy access.

In Canada, a registered shareholder can always have a say in the director nomination process by nominating individuals from the floor … Continue Reading

“Golden Leash” arrangements secure ISS’s cautious nod

Posted in Public M&A, Shareholders, Strategy

After taking a break last proxy season, “golden leash” arrangements are back in the spotlight. A few days ago, Institutional Shareholder Services Inc. (“ISS”) gave “cautious support” to so-called “golden leash” arrangements between Third Point LLC and its two nominees to the board of Dow Chemical Co.… Continue Reading

Harnessing Social Media in Proxy Contests: Opportunities and Legal Challenges

Posted in Private Equity, Public M&A, Shareholders, Strategy

Social media has very seldom been leveraged in Canadian proxy contests. One reason for this may be the lack of knowledge about its full potential.[1] To address this reason, our first post in this series reviewed social media’s impact on public discourse and proxy contests in the U.S. and Canada.

Another reason for the limited use of social media in Canadian proxy contests is the lack of specific regulatory guidelines. Unlike in the U.S.,[2] in Canada there is no regulatory guidance on the use of social media to communicate with shareholders. This article reviews some legal considerations applicable … Continue Reading

Harnessing Social Media in Proxy Contests: Not Just “Social”

Posted in Private Equity, Public M&A, Shareholders, Strategy

Social media has revolutionized how stakeholders receive information about companies. An estimated 1.79 billion people used social media in 2014; 2.44 billion will by 2018.[1] Despite such staggering statistics, social media has not been leveraged to its full potential in Canadian proxy contests. According to a 2013 survey,[2] a majority of directors on the boards of Canada’s largest companies acknowledged that they did not know much about social media.

This is the first of two posts about harnessing social media in Canadian proxy contests. It reviews the use of social media to influence public discourse and proxy contests … Continue Reading

CSA Releases Amendments to the Take-Over Bid Regime

Posted in Private Equity, Public M&A, Shareholders, Strategy

On March 31, 2015, the Canadian Securities Administrators (CSA) published a CSA Notice and Request for Comment with respect to proposed amendments to Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids (MI 62-104) and changes to National Policy 62-203 – Take-Over Bids and Issuer Bids.

The proposed amendments codify and in some cases clarify the concepts previously announced by the CSA in September 2014 and result in some significant changes to the take-over bid regime. Please see our detailed report Amendments to Take-Over Bid Rules Will Deliver More Support to Boards for an in-depth review of some of the … Continue Reading

5 Corporate Governance Tips to Reduce Risk in the M&A Process

Posted in Private Transactions, Public M&A, Shareholders, Strategy

Because of the growing risk of litigation by unhappy (or simply opportunistic) shareholders following the sale or acquisition of a company, corporate governance practices during the M&A process face increasing scrutiny.

In a recent article titled “Documenting the Deal: How Quality Control and Candor Can Improve Boardroom Decision-making And Reduce The Litigation Target Zone”, forthcoming in The Business Lawyer, Leo Strine, Chief Justice of the Delaware Supreme Court, sets forth some best practices for directors and legal and financial advisors “to conduct an M&A process in a manner that: i) promotes making better decisions; ii) reduces conflicts of … Continue Reading

New 2015 Investment Canada Act WTO Review Threshold

Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

Industry Canada has announced that the 2015 Investment Canada Act (“Act”) threshold that applies to most direct acquisitions of Canadian businesses by non-Canadians will be C$369 million.  This is an increase from last year’s $354 million threshold. The threshold applies to the gross book value of the target’s assets. Note that under the Act, a non-Canadian includes a Canadian-incorporated entity that is ultimately controlled outside of Canada.

The existing lower threshold of C$5 million will continue to apply to transactions that relate to cultural businesses or where none of the parties are from a country that is a WTO member.… Continue Reading

The 2015 Proxy Season: Glass Lewis and ISS Canadian Proxy Voting Guidelines Updates

Posted in Public M&A, Shareholders, Strategy

With the 2015 Proxy Season close at hand, Glass, Lewis & Co., LLC (Glass Lewis) and Institutional Shareholder Services Inc. (ISS) recently released their updated Canadian proxy voting guidelines. Changes and clarifications have been made to their guidelines in such areas as advance notice policies and by-laws, shareholder rights plans and majority voting.… Continue Reading

Mini-Tenders 301: Will Such Offers Be Used in Proxy Contests?

Posted in Public M&A, Shareholders, Strategy

This is the final article in our mini-tender trilogy. We have previously discussed mini-tender offers from the perspectives of the offeror, and the issuer and shareholders. This article considers how mini-tenders might be strategically used in proxy contests.

As shareholder activism rises, the activists’ toolkit keeps evolving. The strategic use of a mini-tender offer in a recent proxy contest suggests that such offers may increasingly be considered as a means of influencing the outcome of proxy contests.… Continue Reading

“Golden Leashes” are back: Will shareholder activists win this round?

Posted in Public M&A, Shareholders, Strategy

After taking a break this past proxy season, “golden leash” arrangements are back in the spotlight. A few days ago, Third Point LLC proposed so-called “golden leash” arrangements for their two nominees to the board of Dow Chemical Co.

“Golden leash” arrangements arise when a shareholder activist privately offers to compensate its nominee directors in connection with such nominees’ service as a director of the target corporation. Arrangements vary but include compensating activist directors who are elected based on achieving benchmarks, such as an increase in share price over a fixed term. Shareholder activists only provide such incentives to elected … Continue Reading

Mini-Tenders 201: Responding to Mini-Tender Offers

Posted in Public M&A, Shareholders, Strategy

In our previous article, we introduced mini-tenders and discussed the factors that should be considered before launching a mini-tender offer. As a refresher, a mini-tender is an offer to purchase securities below the threshold that triggers regulatory rules for take-over bids. Such an offer is not specifically regulated and can be used to acquire small but not insignificant positions in public companies, often at a discount to the prevailing market price.

In this article, we discuss mini-tenders from the perspective of issuers and shareholders.

Continue Reading

Mini-Tenders 101: Factors to Consider Before Launching a Mini-Tender Offer

Posted in Public M&A, Shareholders, Strategy

Mini-tenders have a bad reputation, which may explain why they are used infrequently. This is the first in a trilogy of articles about mini-tender offers from the perspectives of offerors, issuers and shareholders. It reviews factors that an offeror should consider before launching a mini-tender offer.

A mini-tender is simply an offer to purchase securities below the threshold that triggers regulatory rules for take-over bids. Such an offer is not specifically regulated and can be used to acquire small but not insignificant positions in public companies, often at a discount to the prevailing market price.

Continue Reading

Early Warning Reporting Threshold Remains at 10% While Other Changes to Enhance Transparency Will Be Implemented

Posted in Public M&A, Shareholders, Strategy

On October 10, 2014, the Canadian Securities Administrators (CSA) provided an update on the status of proposed amendments to Canada’s early warning reporting (EWR) system first published in March 2013.[1]  After extensive public consultation, the CSA announced that they will proceed with the amendments except for two important proposals: to reduce the reporting threshold from 10% to 5% and to include “equity equivalent derivatives” for the purposes of determining the threshold for EWR disclosure.  The CSA intends to publish final amendments to the EWR system and related guidance in the second quarter of 2015, subject to the receipt of … Continue Reading

Shareholder activism goes mainstream – After the Pershing Square Holdings IPO, shareholder activism should be on every corporation’s radar

Posted in Shareholders

Shareholder activists are increasingly influential in Canada’s M&A landscape, but expect that trend to intensify with a proposal to list Pershing Square Holdings on the Euronext Amsterdam stock exchange. The listing is expected to complete Bill Ackman’s capitalization of the new $5 billion fund associated with Pershing Square Capital Management. The listing, which is likely to be complete by mid-October, will provide Mr. Ackman with the stable pool of capital he has long believed his investment strategy would benefit from.

In his 2014 Q2 letter to investors, Mr. Ackman expressed frustration that the Pershing Square group of funds must keep … Continue Reading