Canadian Lawyer

Proxy S olicit service a s fo 37 f 49.9 per cent of the company. restrictions." The government has indi- of Canadian Heritage, who reviews the "In all honesty, a lot is already done cated foreign investors should be prepared purchase of cultural businesses. "Even if by joint venture," observes Lee. "Foreign to provide historical and anecdotal evi- there is not juridical control, indicated by investors are getting more sophisticated. It dence of the independence between the greater than 50 per cent of the shares, the may seem cleaner and easier when starting government and the investor. "You can minister may say there is de facto control up to buy the whole thing because no one look at directorships, negative covenants, of the business if the rest of the factors interferes. It's not a public company any veto rights, contractual rights, equity in put it over the magic line. That's a bit like more so there are no disclosure require- the company, voting shares," says Borgers. the concept of influence. It is never going ments. But for the last six years, Chinese He muses a "cousin" of the influ- to be clearly delineated. The minister of investors have favoured joint ventures ence concept exists with the minister industry will gather information to see if it relying on local Canadian operators or operators familiar with the western style of operations. It doesn't make business sense to take on 100 per cent of risk." George Addy, head of the foreign investment and competition law group at Davies Ward Phillips & Vineberg LLP, highlights the rulings' positive implications for non-SOEs, particularly on predictability. "The prime minister said the rules from pre-BHP are still the rules. They are what they say they are. There P rox is no hidden agenda. The Investment ervicy Solicitation es Canada Review was before, and continues he acqu regarding Proxy S is etronas ition of to be, done on a case by case basis." service olicitation Cariga s li acquisit regarding the Because of the CNOOC decision, for- Canada Ltd ion for CNOO Proxy S eign privately owned enterprises will no $6 C service olicitation Billion s for R longer be lumped together with SOE's but em of Dua $15.1 B l-Class oval Shares will be treated as normal commercial entiillion ties. They will also benefit from the introduction of a distinction in the threshold that triggers a foreign investment review. While SOEs will continue to be subject to a $330-million threshold, private foreign companies will move to the $1-billion threshold — a change possibly being speeded up by the CNOOC decision. However, the definition of an SOE will no longer be confined to an enterprise that is "owned or controlled" directly or indirectly by a foreign government, but one "influenced" directly or indirectly by a foreign government. While control in a commercial sense looks at who owns the shares, the language of influence isn't limited to that. Lee says in China there are economically powerful private enterprises and even Chinese SOEs are real commercial entities with specific performance targets that compete with each other in Independence | Experience | Results China. "The concept of 'influence' will require careful consideration and review," laurelhill.com warns Borgers. "I expect it will be a spectrum where the lever of influence increasCorporate Governance Asset Recovery es through shareholdings, debt, and legal Proxy S o service licitation s regard ing the acq uisiti When winning matters. R IN LDE W O L A H RE ROV A SH APP www.CANADIAN aurelHill_CL_Feb_13.indd 1 L a w ye r m a g . c o m F e b r uary 2013 41 13-01-21 9:36 AM

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