Topic: Governance and directors’ liability

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A no-shop provision can be a buyer’s best friend, while exceptions may be the target’s best friend

Deal protections are an important aspect of M&A transactions. Buyers will typically negotiate with the target of the transaction to include all kinds of deal protections mechanisms, including no-shop provisions, matching rights, and break fees payable to the buyer. No-shop provisions in particular restrict the ability of the target board to solicit alternative proposals (including … Continue reading

New share register requirements! Working towards greater corporate transparency

In November 2018, the Standing Committee on Finance released a report to address the issue of money laundering and terrorist financing in Canada. The Committee’s first recommendation emanated from the corporate registry regime in the United Kingdom (“UK”). In an attempt to emulate the UK’s system, the Committee recommended that the Canadian government work with … Continue reading

Full disclosure: financial assistance and related corporations

Many transactions involve financial assistance by means of a loan, guarantee or otherwise between related corporations. Often, an important consideration in these circumstances is: does such financial assistance trigger any disclosure obligations? Generally, a corporation may give financial assistance to any person (including an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative) … Continue reading

Bill C-97 amendments to the CBCA: broadening the scope of management considerations

The 2019 budget implementation bill (Bill C-97) contains significant amendments to the Canadian Business Corporations Act (CBCA), which should be noted by organizations wishing to acquire Canadian targets. On April 30, 2019, Bill C-97 passed its second reading and was referred to Committee in the House of Commons. The amendments to the CBCA create the … Continue reading

Cannabis and corporate governance: time for grow ops to grow up?

Since the legalization of recreational cannabis on October 17, 2018, the Canadian cannabis industry has experienced a significant boom. In its 2018 Cannabis Report, Deloitte predicted that legal sales of marijuana are expected to generate up to $4.34 billion in 2019. Moreover, and as previously discussed, Health Canada has introduced draft regulations governing the production … Continue reading

A pragmatic approach to climate risk

Climate change is a reality we cannot ignore. Media report season after season record-breaking heat, drought, bushfires, etc. The impact on businesses is real, and investors are increasingly pushing for more detailed disclosure on climate change-related issues. According to the Wall Street Journal, companies are expected to face 75 climate-related shareholder proposals this AGM season. … Continue reading

Corporate governance 101: increasing minority shareholder voting power

If you are a minority shareholder you may feel a lack of control over corporate matters because majority shareholders, well, hold the majority of the voting rights. Certain shareholder agreements can help alleviate this lack of control and provide you with greater voting power. Shareholder Agreements Simply put, a shareholder agreement is a private contract … Continue reading

Shareholder responsibility over auditor tenure

Concerns about the term or length of auditor tenure have returned to relevance following the recent fall of industry giants, providing good reason for Canadian companies to reconsider their audit and governance practices. In 2016, the European Union implemented mandatory rotations of audit firms for public companies, which was similarly considered, though rejected, in the United … Continue reading

Look to the future: a tip for analyzing corporate culture in an era of evolving shareholder activism

2018 promises to be a year in which corporate culture will likely become an even more important focal point for investors and activists. There’s no denying that social media has drastically altered the dynamic for public companies. Today, shareholders are increasingly calling upon corporations to take public stances on various social (and sometimes political) issues, … Continue reading

Canadian Securities Administrators are seeking comments on soliciting dealer arrangements

The Canadian Securities Administrators (the “CSA”) have issued CSA Staff Notice 61-303 and Request for Comment – Soliciting Dealer Arrangements (the “Notice”) on the use of soliciting dealer arrangements. “Soliciting dealer arrangements” generally refer to agreements entered into between issuers and investment dealers under which the issuer agrees to pay to the dealers a fee … Continue reading

Shareholders’ agreements: right of first refusal versus right of first offer

It is common for shareholders of a closely held corporation to set out the rules that govern their relationship vis-à-vis one another in the form of a shareholder agreement. One key concern for shareholders when negotiating a shareholder agreement is controlling the transfer of shares to unknown or undesirable persons, while still maintaining liquidity in … Continue reading

Shareholder activism in M&A

As noted by Kingsdale Advisors in a recently published report, corporate directors and their legal advisors continue to pay insufficient attention to shareholder activism in M&A. The authors of the 2017 special report caution that not only have shareholder activists been emboldened by post-financial crisis legislative changes that afford shareholders greater say, but that these investors … Continue reading

Socially responsible investing: considerations for private companies

Certain consumers seeking out companies that have socially responsible products and services or that have a focus on environmental, social and corporate governance (ESG) is nothing new. Recently, however, evidence has emerged suggesting that investors, both retail and institutional, are increasingly taking these social factors into account when making decisions about how to allocate their … Continue reading

The InterOil decision: robust and independent fairness opinion required

A recent decision of the Yukon Court of Appeal, InterOil Corporation v Mulacek, has potentially significant consequences for corporate governance practices in the context of plans of arrangement. Fairness opinions in plans of arrangement When a corporation proposes a plan of arrangement to its shareholders, it is generally considered a best practice of corporate governance … Continue reading

The role of the strategic board in value creation

It is not in dispute that the role of the board of directors is to provide oversight of management and advise on the strategic direction of the corporation. However, the delineation of roles and responsibilities between management and directors in setting corporate strategy can often become blurred. In collaboration with The Boston Consulting Group and … Continue reading

Management diversity: do women in management lower a firm’s risk profile?

This blog post originally appeared in Norton Rose Fulbright’s Special Situations blog. In an earlier post, we commented on the formal amendments to National Instrument 58-101 – Disclosure of Corporate Governance Practices and Form 58-101F1 – Corporate Governance Disclosure imposing enhanced disclosure requirements with respect to female representation on the boards and in executive officer positions of … Continue reading

Assessing corruption risks in M&A transactions

In a previous post, we discussed the importance of considering anti-corruption and bribery risks when engaging in international transactions. In connection with the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions, Canada, the US and the UK, as well as an increasing number of legislatures around the world have implemented … Continue reading

Private equity investments and common governance rights in investee companies

Private equity investors (PEIs) are often a good source of capital for companies looking to start, maintain, or grow their operations and can also provide significant operational and transactional expertise. Like other investors, PEIs operate with a primary goal in mind; that is, to receive a favourable return on their investment. However, PEIs generally seek … Continue reading

Changes of note to the Yukon Business Corporations Act

On May 1, 2015, a significant number of changes to the Yukon’s Business Corporations Act and Business Corporations Regulation were proclaimed in force. This was the culmination of an almost seven-year process undertaken to modernize the Yukon’s corporations and securities legislation. While many of these changes simply bring the Yukon’s corporations and securities legislation in … Continue reading

Common liquidity rights in private equity investments in early stage companies

Early stage companies face an uphill climb in growing their business and ensuring their viability going forward. Private equity firms can provide capital as well as significant operational and transactional expertise to aid in a company’s growth. However, private equity investors often intend to exit any investment within a defined time period. As a result, … Continue reading

What can private companies learn from shareholder activism? Our top 5 tips for companies and boards

As a new year begins, it is always a good time to take stock of the successes of the past year and look forward to doing even better in 2015. Shareholder activism will continue to be a “hot topic” for publicly listed issuers in 2015, but what lessons from the activism arena translate to companies … Continue reading

Golden parachutes on the rise during down economy

This post was contributed by Éric L’Italien, Lawyer, Norton Rose Canada Given the shaky economy over the past couple of years and the reduced number of takeovers, mergers and acquisitions, one would have expected a decline in indirect compensation such as golden parachutes. However, according to a recent Alvarez & Marsal study, there has been a 32% increase over the … Continue reading
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