A new rule could change the face of the mergers and acquisitions sector in Canada, industry experts believe.
The proposed National Instrument 62-105 Security Holder Rights Plans and its Companion Policy was published by the Canadian Securities Administrators (CSA) for a fixed-length comment period in March of this year.
If the suggested rule is indeed rolled out, it could have far-reaching implications for the M&A sphere in Canada, partly by ensuring that the completion of a hostile bid in the country would be far more costly and at risk of a greater level of uncertainty from the bidder’s perspective.
The proposed National Instrument 62-105 Security Holder Rights Plans and its Companion Policy was published by the Canadian Securities Administrators (CSA) for a fixed-length comment period in March of this year.
If the suggested rule is indeed rolled out, it could have far-reaching implications for the M&A sphere in Canada, partly by ensuring that the completion of a hostile bid in the country would be far more costly and at risk of a greater level of uncertainty from the bidder’s perspective.
The rule would provide target boards with the ability to delay a planned acquisition bid for a minimum of 90 days, and in fact could see a rights plan being left in place indefinitely in the face of a hostile takeover bid, so long as a majority of the target’s security holders were in favor of the plan.
If passed, the new rule would signal the conclusion to the long-held belief that a rights plan should simply cease to exist once it has completed its appropriate purpose of enabling directors' efforts to boost security holder choice and value by encouraging transactions of a competitive nature.
The current approach is seen to unduly favor bidders, many industry insiders believe, by emphasizing the rights of security holders to decide whether to tender their securities to a hostile bid, and the CSA is responding to this with its proposed rule, which could see Canadian companies made less vulnerable to hostile bids than they are under current legislation.
If passed, the new rule would signal the conclusion to the long-held belief that a rights plan should simply cease to exist once it has completed its appropriate purpose of enabling directors' efforts to boost security holder choice and value by encouraging transactions of a competitive nature.
The current approach is seen to unduly favor bidders, many industry insiders believe, by emphasizing the rights of security holders to decide whether to tender their securities to a hostile bid, and the CSA is responding to this with its proposed rule, which could see Canadian companies made less vulnerable to hostile bids than they are under current legislation.
The suggested new rule would take the ultimate decision-making authority relating to the uptake or housekeeping of rights plans away from regulators and instead allow target boards to adopt rights plans, even if a potential hostile bid is in place, so long as their decision is supported by target security holders.
About Merrill DataSite
Merrill DataSite is a secure virtual data room (VDR) solution that optimises the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSite’s multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.
With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organisation-wide discipline in the management and processing of confidential content. Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration – the highest standard for information security – and is currently the world’s only VDR certified for operations in the Europe, United States and Asia.
As the leading provider of VDR solutions, Merrill DataSite has empowered more than two million unique visitors to perform electronic due diligence on thousands of transactions totalling trillions of dollars in asset value. Merrill DataSite VDR solution has become an essential tool in an efficient and legally defensible process for completing multiple types of financial transactions.
For more information, please contact Merrill DataSite: Tel: 1-866-867-0309
Read the full article here: http://www.datasite.com/significant-changes-canadian-mergers-acquisitions-regulation121.htm
Follow us on Twitter: @merrilldatasite
No comments:
Post a Comment