SHAREHOLDERS LIST – Bidder can request a list from the target by following the procedure under the applicable corporate statute. The target must respond to the request within 10 days. – Bidder permitted to commence the bid by advertisement, but must request the shareholders list on or before the date the bid is advertised, and must send the bid circular to shareholders within two business days of receiving list. SHAREHOLDER APPROVAL FOR SHARE EXCHANGE OFFER – A TSX-listed bidder proposing to make a share exchange offer must obtain shareholder approval when number of securities issuable on acquisition exceeds 25% of outstanding securities of issuer (on a non-diluted basis). U.S. SHAREHOLDERS OF CANADIAN TARGET – If U.S. securityholders hold less than 40% of “foreign private issuer” target shares, the multijurisdictional disclosure system (MJDS) generally exempts a bid by a Canadian public company that is a foreign private issuer from U.S. tender offer regulation and from SEC review of the registration statement filed in respect of the share exchange bid (U.S. anti-fraud provisions, Schedule 13D and Schedule 13E-3 still apply). – MJDS can be used by a non-Canadian bidder only in a cash deal; in a share exchange bid, both bidder and target must be Canadian foreign private issuers for the bidder to use the MJDS registration exemption. – If MJDS is unavailable for the share exchange bid (e.g., because the target is not a foreign private issuer), it may be possible to avoid the SEC registration requirement by making “vendor placement” or excluding U.S. shareholders from the bid.
Lock-Up Agreements
– Securityholder commitment to tender to a takeover bid (or vote in support of arrangement or amalgamation) is permissible and common. – Securityholder may have right to withdraw and tender to a higher offer. – Contributes to certainty of execution; locked-up securities count toward 90% compulsory acquisition threshold and to 50% minimum tender condition. – Multilateral Instrument 61-101 permits securities acquired under a lock-up agreement to be voted as part of the minority in a majority-of-the-minority vote if the locked-up securityholder is treated identically to all other securityholders under offer. – Entering into a lock-up agreement does not generally trigger a typical Canadian “poison pill” if securityholder has the right to withdraw and tender to a higher offer. – Lock-up agreements must be filed publicly.
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Canadian Mergers & Acquisitions
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