In spite of the Commission’s articulation of the evidentiary requirements needed to support a joint actor finding—requirements that clearly eschew speculation and inference—some issuers continue to brandish the “acting jointly or in concert” characterization as a sword to stifle shareholder engagement and discussion. This makes the guidance provided in NorthWest Copper all the more significant (and helpful) for shareholders and their advisors as they navigate contested situations.
form of mutual understanding about how shares will be voted. Notably, for the Commission the mere alignment of concern between shareholders does not constitute a “plan of action or a commitment to pursue” a course of action. Yet, in spite of the Commission’s articulation of the evidentiary requirements needed to support a joint actor finding—requirements that clearly eschew speculation and inference—some issuers continue to brandish the “acting jointly or in concert” characterization as a sword to stifle shareholder engagement and discussion. This makes the guidance provided in NorthWest Copper all the more significant (and helpful) for shareholders and their advisors as they navigate contested situations. EARLY WARNING REPORTING NOT TRIGGERED ON MERE FORMATION OF GROUP The Commission also provided important guidance regarding activists’ obligations to comply with Canada’s early warning reporting (EWR) rules. Those rules require a shareholder to report when it has acquired, whether alone or with its joint actors, 10% or more of an issuer’s shares. The BCSC confirmed that the mere formation of a joint actor group whose collective ownership satisfies the 10% early warning threshold does not require the filing of an EWR report. Rather, a group’s EWR obligation is triggered only when a group member subsequently acquires shares of the issuer. The formation of a group that includes a person who is already an EWR filer in respect of the issuer, however, would require such person to update its report if the formation of the group constitutes a change of a material fact contained in their existing report. As well, the Commission confirmed that the EWR regime applies to acquisitions of securities generally, not just in the context of a take-over bid or
similar merger scenario. Accordingly, shareholders should be mindful of their reporting obligations when accumulating shares in connection with a potential proxy contest. For more details regarding the BCSC’s decision, refer to our bulletin: “ In a Win for Shareholders, B.C. Securities Commission Provides Joint Actor Guidance for Proxy Contests ”. Ontario Capital Markets Tribunal Rejects Novel Rights Plan Canadian issuers continue to use shareholder rights plans (“poison pills”) to prevent creeping acquisitions of negative control blocks of 20% or more of their outstanding stock. In Riot Platforms, Inc. v Bitfarms Ltd. (November 19, 2024), the Ontario Capital Markets Tribunal considered the use of a rights plan to restrict a shareholder’s accumulation of shares below the customary 20% threshold in the face of a meeting requisition initiated by the shareholder. In its reasons, the Tribunal provided meaningful guidance to issuers considering whether such plans could be used to frustrate a dissident’s accumulation of shares in the run up to a proxy contest.
BACKGROUND
On July 24, 2024, the Tribunal cease-traded a shareholder rights plan (Rights Plan) adopted by Bitfarms Ltd. (Bitfarms) following a complaint brought by a significant shareholder of Bitfarms, Riot Platforms Inc. (Riot). The Rights Plan was notable for its 15% share ownership threshold, which was significantly lower than the near-universal 20% threshold commonly used by
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Davies | dwpv.com
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