Canadian Securities Regulators Propose to Revive and Streamline Rights Offerings

On November 27, 2014, the Canadian Securities Administrators (“CSA”) published for comment proposed amendments (the “Proposed Amendments”) to the rules governing rights offerings in Canada. Rights offerings are offerings of securities to shareholders of the issuer existing at the time of the offering. The CSA acknowledges that rights offerings can be one of the fairer ways for issuers to raise capital as they provide security holders with an opportunity to protect themselves from dilution. However, the CSA also recognizes that reporting issuers very seldom use prospectus-exempt rights offerings because of the associated time and cost.… ... View full post

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

Duty of Good Faith and Honest Performance Extended to All Contracts in Canada

On November 13, 2014, the Supreme Court of Canada updated Canadian common law by extending for the first time the principle of good faith to all contracts. Previously, the duty of good faith existed only in employment and insurance contacts in Canada. The ruling now aligns Canadian common law with Civil Law in Quebec and the law in most U.S. jurisdictions. The Court expects its decision to bring certainty and coherence to this area of law. The Court, in its decision in Bhasin v.… ... View full post

Canada Introduces Resource Sector Transparency Act to Fight Corruption

On October 23, 2014, the Canadian government introduced the Extractive Sector Transparency Measures Act (the “Act”). The purpose of the Act is to implement Canada’s international commitments to participate in the fight against corruption through the implementation of measures applicable to the resource sector. Specifically, the Act requires entities involved in the commercial development of oil, gas or minerals to publicly disclose certain payments they make to governments. Application of the Act Generally, the Act applies to any entity engaged in, or controlling other entities engaged in, the oil, gas or mineral industry that: is listed on a stock exchange in Canada; or has a place of business in Canada, does business in Canada or has assets in Canada and that meets at least two of the following conditions for at least one of its two most recent financial years: (i)      the entity has at least $20 million in assets, (ii)    the entity has generated at least $40 million in revenue, and/or (iii)   the entity employs an average of at least 250 employees.… ... View full post

Canadian Securities Regulators Require Disclosure on Women’s Recruitment and Participation

The securities regulatory authorities in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec and Saskatchewan (“participating jurisdictions”) announced on October 15, 2014 amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure. These rule amendments will come into effect on December 31, 2014, in time for the 2015 AGM season. Once in effect, the amendment will require non-venture issuers to provide annual disclosure regarding the following items in their proxy circular or annual information form: director term limits and other mechanisms of renewal of the board of directors, policies regarding the representation of women on the board, the board’s or nominating committee’s consideration of the representation of women in the director identification and selection process, the issuer’s consideration of the representation of women in executive officer positions when making executive officer appointments, targets regarding the representation of women on the board and in executive officer positions, and the number of women on the board and in executive officer positions. … ... View full post