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 MI 61-101.
Purpose of MI 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 holder of equity security can be required to sell its shares, regardless of whether equity security is replaced by another security (e.g. plan of arrangement or amalgamation), but only if transaction involves related party of issuer that is acquiring the issuer, 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
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Canadian Mergers & Acquisitions
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