Tag archives: board of directors

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 and sale of edibles, extracts, and topicals, potentially providing additional growth opportunities for Cannabis companies to partner with the traditional food and beverage industry.

As the industry continues to grow, it is worth asking the question, how do these companies stack up from … Continue Reading

Holding up the deal: the threat of “bumpitrage” to M&A

Considering the robust global M&A markets of the last few years, it is unsurprising that activist investors have increasingly sought to leverage these transactions for their own gain. To that end, shareholder activists have developed a variety of M&A-related strategies. Most commonly, they either seek to catalyze transactions by pressuring companies into a merger or acquisition, or to scupper deals that would otherwise have gone ahead. Another commonly-used strategy involves agitating for better deal terms. Often referred to as ‘bumpitrage’, the activist investor purchases shares in a company that is subject to a takeover bid, and then rallies other shareholders … Continue Reading

Director distraction and successful M&A

Members of a board of directors play a crucial role in the decision making processes of a company, which shape the company’s practices, strategies, future goals and overall success. Directors who are not are primarily employed by the subject company or those who sit on multiple boards may be at a risk of neglecting some of their key director responsibilities if they are preoccupied with too many things at once. This is not to say that busy directors will inevitably get distracted and neglect their responsibilities, but that directors ought to be mindful of juggling too many roles at once … 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 RBC Capital Markets, we have released a paper offering a fresh perspective on an enhanced role for the board of directors in value creation and setting corporate strategy. We recommend that board members should engage regularly with management to critically examine value creation alternatives with … Continue Reading

The role of boards in M&A transactions

In a recent article from the Harvard Law School Forum on Corporate Governance and Financial Regulation, Alexandra R. Lajoux, chief knowledge officer at the National Association of Corporate Directors, discusses the role of boards of directors in M&A deals. Emphasis is made on readiness and oversight.

According to Dealogic, the value of M&A activity is at its highest since the global financial crisis with July 2015 totalling $549.7 billion globally, the second highest monthly total value since April 2007. A more detailed review of global M&A trends may be found here.

According to Ms. Lajoux, boards must consider M&A … Continue Reading

When and how to use fiduciary out clauses

Almost every acquisition agreement involving the acquisition of a public company will include a provision whereby the board of directors of the target company agrees to stop soliciting competing bids or stop having any discussions with any other party who might be interested in a making a competing bid. This is generally known as the “no-shop” clause. However, the directors of the target company have certain fiduciary duties that they must comply with. Directors must act honestly, in good faith, and with a view to the best interests of the company, which in the context of an acquisition includes getting … Continue Reading

Directors’ duties in M&A

Directors have clear duties when acting for the corporation, particularly when choosing whether to engage in M&A.  Below is a brief summary of what duties directors owe to the corporation and how directors can uphold them in M&A.

Directors’ duties

At all times, and particularly during M&A, directors have the following duties: (1) a duty to supervise; (2) fiduciary duties; and (3) a duty of care.

  1. Duty to Supervise. Directors have specific, statutory duties to manage the corporation. To satisfy this duty, directors may select a senior management team that is qualified and worthy of the director’s trust.  However, directors
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