Canadian Lawyer

LEGAL REPORT/Securities Law Who holds the power? As regulators look to step away from interfering in how takeover bids are handled, the securities industry contemplates who should hold more sway: shareholders or boards. W hen it comes to how takeover bids are handled in Canada, should shareholders be the ones left to decide or should it be the domain of boards of directors? Whatever side you're on, Canada's regulators are looking to take a step back, proposing changes to the way companies can manage hostile bidders in an attempt to give some power back to target boards. In March, the Canadian Securities Administrators issued for comment National Instrument 62-105 Security Holder Rights Plans, which would establish a new framework for handling rights plans in Canada by giving a company's board and shareholders greater discretion in the use of plans known as "poison pills." "For the most part they're signaling an approach that they will just let the pill stick," says Janet Howard, a partner with Norton Rose Canada LLP. "If you read further into what they're proposing in the amended rules, the shareholders still have the ultimate final say." At the same time, the Autorité des marchés financiers in Quebec also launched a consultation on intervention by Canadian securities regulators in respect of defensive tactics adopted in response to unsolicited takeover bids. The CSA and AMF are both proposing regulators back away from getting involved in shareholder rights plans and give companies a longer period of time to respond to takeover bids. The CSA proposal will move to give the target board 90 days, rather than the previous average of 40 to 50 days, to find an alternative transaction or to negotiate with the first bidder. www.CANADIAN L a w ye r m a g . c o m June 2013 39 Pierre-Paul Parriseau By Jennifer Brown

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