Montreal Exchange Demutualization

On September 25, 2000, members of the Montreal Exchange voted unanimously in favour of a proposal to effect the demutualization of the Exchange and convert it from a not-for-profit organization in which ownership was bundled with trading access rights into a for-profit organization in which ownership is separate from access to trading facilities. Memberships have been swapped for common shares of a new entity, Montreal Exchange Inc. (ME Inc.), and trading permits. Initially, the members of the “old” Exchange will be the shareholders of ME Inc. In time, however, it is expected that shareholders will be able to sell their shares while retaining access to trading facilities. Market participants seeking access to the trading facilities of the new Exchange will not have to become shareholders, and new shareholders will not be required to be market participants. The demutualization is expected to provide ME Inc. with access to new sources of capital and to equip it with the structure it needs in order to quickly respond to change and opportunities in a highly competitive global derivatives market.

The demutualization involved the conversion of a company incorporated by private bill in 1874 into a modern corporation governed by Part IA of the Companies Act (Quebec), with steps to minimize the fiscal impact of the change on members of the old Exchange. Acting for the Exchange and ME Inc. in the demutualization process was Ogilvy Renault’s Montreal office with a team which included Claude Fontaine, Q.C., Alain Côté (tax), Solomon Sananes, Marguerite Goraczko and William Hesler, Q.C.


Alain Côté William Hesler Marguerite Goraczko Solomon Sananes