> Must be careful characterizing advice to boards and fairness opinion analysis. > Does not include a valuation prepared for the purpose of assisting an interested party in determining the price to be offered (unless made available to any of the independent directors of target). MINORITY SHAREHOLDER APPROVAL – In addition to approvals under corporate law, shareholder approval by a majority-of-the- minority, that is, more than 50% of the votes cast by disinterested shareholders at a meeting, is required for a “business combination.” > Although shares held by a related party-acquirer and its joint actors are excluded from the minority, shares acquired under a bid can be counted toward the majority-of-the-minority approval of the second-step transaction. > Shares held by related party that receives a collateral benefit or different consideration are excluded. Equity Rollovers – The view of the Ontario Securities Commission is that where any shareholder (whether or not a director, officer or related party of the target) rolls its equity interest over in a take-private transaction, the shares of such shareholder are to be excluded from any majority-of-the- minority approval required for a business combination. In addition, the transaction circular is expected to include disclosure of the board’s or special committee’s justification in support of the differential treatment. ENHANCED DISCLOSURE – Multilateral Instrument 61-101 requires detailed disclosure, primarily to level the informational playing field between the proponent of the transaction and the minority. – Requires a detailed description of the board’s review and approval process, including any materially contrary view or abstention by a director and any material disagreement between the board and special committee. SPECIAL COMMITTEE – A special committee of directors who are independent of the proponent of the transaction is typically formed for Multilateral Instrument 61-101 transactions (only mandatory in case of an insider bid, but recommended for all material conflict of interest transactions). – Reports to the full board, which then makes a recommendation to shareholders on the transaction. – Supervises the valuation process.
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Canadian Mergers & Acquisitions
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