The Ontario Securities Commission issued an order this week in connection with a shareholder rights plan adopted by the board of directors of MOSAID Technologies Incorporated in response to a hostile bid made by Wi-LAN Inc. The OSC ordered that effective November 1, 2011 (i.e. 70 days after the commencement of Wi-LAN’s unsolicited offer), MOSAID’s shareholder rights plan must go. The key factors considered by the OSC in arriving at its decision to allow the rights plan to stick around for another couple of weeks (not as long as MOSAID had wanted) included:
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- MOSAID was continuing to run an auction
A poison pill, or shareholder rights plan, is a device implemented by a company’s board of directors in order to deter unsolicited or hostile acquisition proposals. The rights plan originated in the United States and was introduced in Canada in 1988 when Inco adopted its first rights plan. The introduction of poison pills in both countries was met with questions as to their legality. In the divergent approaches through which these questions were resolved in Canada and the United States (in particular Delaware), the rights plan and its effectiveness as a take-over defence have followed divergent paths.
In Delaware, the … Continue Reading