Defending Your Company From Activist Shareholders

In recent years shareholder activism has increased significantly. There have already been more activist campaigns announced against S&P 500 companies in 2014 than in any other year. 2014′s year-to-date total of 29 campaigns is over three times the activity against S&P 500 firms in 2006. When faced with an activist shareholder, a company must assemble a team as soon as possible, to include lawyers, proxy solicitation firms, auditors, PR advisors, valuators, bankers, etc. Once the team is assembled the company must then formulate a response based on available information: what is the company’s shareholder base, what are the chances of success if the company opposes the activist, what does the activist want, likelihood of settlement with activist, who is the activist, who controls it, primary investors, its activist history, etc.… ... View full post

SEC Publishes Risk Alert on Broker-Dealers’ Unregistered Sales of MicroCap Stocks on Behalf of Customers

On October 9, 2014, the Securities and Exchange Commission (the “SEC”) published a Risk Alert and FAQs to remind broker-dealers of their obligations when they engage in unregistered sales of securities on behalf of their customers. The SEC also announced an enforcement action against current and former brokerage subsidiaries of E*TRADE Financial Corporation that failed in their gatekeeper roles and improperly engaged in unregistered sales of microcap stocks on behalf of their customers. Section 4(a)(4) of the Securities Act of 1933 provides a registration exemption for broker-dealers when executing customers’ unregistered sales of securities if, after reasonable inquiry, the broker-dealer is not aware of circumstances indicating that the customer would be violating the registration requirements of Section 5 of the Securities Act of 1933.… ... View full post

Canadian Securities Administrators Propose New Take-Over Bid Rules

On September 11, 2014, the Canadian Securities Administrators (CSA) announced that they intend to publish for comment a new harmonized regulatory proposal to Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and Ontario Securities Commission Rule 62-504 Take-Over Bids and Issuer Bids (for Ontario) (collectively, the Proposed Bid Amendments). The Proposed Bid Amendments will aim to facilitate the ability of shareholders to make voluntary, informed and coordinated tender decisions and provide target boards with additional time to respond to hostile bids, each with the objective of rebalancing the current dynamics between hostile bidders and target boards.… ... View full post

Clark Wilson LLP Appointed to Act as a PAL (Principal American Liaison) and a DAD (Designated Advisor for Disclosure) on the OTC Market Group’s OTCQX and OTXQB.

OTC Markets Group Inc. (the “Group”) recently announced significant changes to its OTCQB marketplace.  These changes, which began to take effect on May 1, 2014, are intended to align the OTCQB more closely with venture stage markets focused on smaller growth and developing stage companies. Previously, securities were eligible for quotation on the OTCQB market if, among other things, the issuer was a registrant with the Securities and Exchange Commission (the “SEC”) or the Federal Deposit Insurance Corporation (the “FDIC”) and an SEC registered broker-dealer filed a Form 211 with the Financial Industry Regulatory Authority (“FINRA”). … ... View full post

TSX Requires Majority Voting Policy

The Toronto Stock Exchange ("TSX") recently amended its corporate finance manual to require each issuer to adopt a majority voting policy for its first fiscal year ended on or after June 30, 2014. Under corporate law, a shareholder can only vote for a director or withhold their vote; they cannot vote against a director. As such, the directors with the most votes get elected, even if a majority of shareholders withheld their vote with respect to that director. A majority voting policy requires any director that is not elected by at least a majority of the votes cast with respect to his or her election to tender their resignation to the company.… ... View full post