Related Party Acquisitions – Management buyout offers, insider bids and other acquisitions by or involving a significant shareholder or other related party of the target are regulated under Multilateral Instrument 61-101. Purpose of Multilateral Instrument 61-101 – Intended to level the playing field for the minority when transactions are proposed in which a significant shareholder or other insider could have advantage by virtue of voting power, board representation or increased access to information. – Affects business combinations, related party transactions, second-step going-private transactions, issuer bids and insider bids.
Types of Transactions Covered
– Transaction types caught include: > Insider bids: Takeover bid by holder of shares carrying more than 10% of voting rights or other insider (e.g., directors and officers). > Business combinations: Transaction whereby equity securityholders are required to sell their shares, regardless of whether they receive another security (e.g. plan of arrangement or amalgamation), but only if a related party is treated differently (i.e., the related party is the acquirer or is not treated identically to other holders or receives consideration of greater value than other holders). > Related party transactions: Transaction between issuer and significant shareholder or other related party. ○ “Related party” includes a director or officer, or a holder that has the ability to materially affect the control of the issuer and a holder of securities carrying more than 10% of the voting rights.
Procedural and Substantive Requirements
– Independent valuation. – Minority shareholder approval.
22
Canadian Mergers & Acquisitions
Powered by FlippingBook