CORPORATE FINANCE & SECURITIESOVERVIEW
Corporate finance and securities law encompasses public and private financings, mergers & acquisitions, corporate governance, listing matters, and securities regulation. Clients include public and private issuers, underwriters, institutional investors, private equity funds and other market participants.
Counsel working in this area provide a number of services, including:
- managing public offerings, from negotiating an underwriting agreement and drafting the prospectus, to coordinating dealings with the TSX and Canadian securities regulators;
- facilitating M&A transactions, including the preparation and negotiation of purchase agreements, development of take-over bid and dissident proxy circulars, and advising on defensive tactics; and
- advising corporate directors and officers on corporate governance issues and continuous disclosure requirements.
A. National Regulator
In 2009, the federal government signaled its intent to move ahead with the establishment of a national securities regulator by establishing the Canadian Securities Transition Office (CSTO). Subsequently, the CSTO delivered the proposed Canadian Securities Act. The federal government referred the proposed Act to the Supreme Court of Canada for its opinion as to constitutionality of the draft legislation.
The provincial governments of both Alberta and Québec, however, referred the matter to their own Appeal Courts. In March 2011, the Alberta Court of Appeal ruled against the federal scheme, saying the legislation was unconstitutional. The court urged the federal government to negotiate a new regulatory regime with the provinces. For its part, the Supreme Court heard the case in April 2011 and at press time — the court's judgment was still reserved.B. Poison Pills
In the past few years, there had been an emerging perception that Canadian securities regulators were softening their stance regarding poison pills. The decisions by the ASC in Pulse Data and the OSC in Neo Material Technologies seemed to open the door a crack for target issuers to argue a poison pill should be permitted to stay in place in the face of a hostile bid.
In April 2010, that ray of hope dimmed dramatically when the BCSC cease-traded the poison pill adopted by Lions Gate Entertainment in the face of a hostile bid by corporate raider Carl Icahn. The BC Court of Appeal refused to overturn the decision and in late December 2010, the OSC came to the same conclusion in Baffinland.
The rulings make it most unlikely that a poison pill might serve as a permanent shield to a bid, rather than merely a temporary defensive measure.C. Dual Class Structures
Magna International's proposal to eliminate the company's dual class share capital structure in 2010 raised the ire of Canada's major pension plans. The controversial plan to convert Frank Stronach's multiple voting stake into a package of cash and subordinate voting shares valued at over $800 million also caught the attention of the Ontario Securities Commission (OSC), which convened a hearing to review the matter.
While the OSC ultimately concluded that the proposed transaction was not abusive of shareholders or the capital markets, it did require additional disclosures to shareholders in order that they could properly assess the fairness of the offer. The Commission also noted concerns with the process followed by the Board, the Special Committee and management in reviewing and deciding to submit the proposed to shareholders for approval.
Though Magna's shareholders ultimately approved the conversion plan, the OSC's reasons in the case, released in early 2011, have drawn attention to disclosures in related party transactions.