Tag archives: Corporate governance

Proposed Amendments to Ontario’s Business Corporations Act: Relaxed Corporate Governance Requirements May Make Ontario an Attractive Jurisdiction

On October 6, 2020, the Government of Ontario introduced Bill 213, Better for People, Smarter for Business Act, 2020 (“Bill 213) to support the province’s economic recovery and reduce barriers to doing business in Ontario. If it passes, Bill 213 would bring important changes to the Ontario Business Corporations Act (“OBCA”) that, among other things, will:

  • Remove the director residency requirements for private and public OBCA corporations; and
  • Lower the threshold for passing written, ordinary resolutions for privately-held OBCA corporations

Removal of Director Residency Requirements

Currently, the OBCA requires that at least 25% of 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 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

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

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 also enjoy access to ever more sophisticated playbooks. Further, they stress that activism in M&A is no longer the exclusive domain of entrepreneurial hedge funds; traditionally passive investors, including large asset managers and even pension funds, are increasingly willing to ensure that their … 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 investments.

Responsible investing

According to a recent study by the Responsible Investment Association, the Canadian market for responsible investments has grown by 49% over the past two years and has surpassed $1.5 trillion in assets under management. This suggests that Canadians are becoming … 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 to obtain a fairness opinion that assesses the financial fairness of the arrangement for affected shareholders. The fact that the directors sought expert financial advice evidences compliance with their fiduciary duties and, when applying for court approval, is an important factor in persuading the … 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

Female representation on boards: how does your company stack up?

boardroom-680x220Last year, the Canadian Securities Administrators (CSA) began an initiative to increase transparency regarding female representation on boards and in executive officer positions. This was done by way of proposing amendments to the existing National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101). In the proposal stage, these amendments faced the typical gamut of comments, ranging from applause to dissatisfaction. Deal Law Wire also commented on these amendments in a previous post.

On December 31, 2014 the proposed amendments to NI 58-101 were implemented and, as a participating jurisdiction, Ontario became subject thereto. The … 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

The impact of financial reporting periods on M&A success

Stock MarketWhile the success of a merger or acquisition may be best determined over a long time horizon of several years, investors tend to have a shorter-term view of what constitutes success or failure in M&A. Corporations are held to be only as successful as their latest quarterly results and many investors base their opinions off analysts’ reports and forecasts. Given the weight accorded to these reports by investors, corporations often focus on quarterly results in lieu of longer-term performance. One result is that the longer-term planning required to extract the most value from an M&A transaction may be abandoned in … Continue Reading

The impact of corporate social responsibility on M&A pursuits

An organization’s reputation and longevity requires more than financial prosperity. Highly publicized corporate scandals and M&A disasters are a real threat to a corporation’s long-term sustainability. Corporate Social Responsibility (CSR) is more than a management buzzword; it plays a significant role in M&A strategy. CSR has a variety of elements, but generally involves an organization committing to adopt ethical behaviours and enhance economic development with the objective of improving the quality of life of its employees, the surrounding community, and society at large.

According to a report entitled “The Impact of Corporate Social Responsibility on Mergers and Acquisitions”Continue Reading

Canada’s anti-corruption regime: implications for corporate governance practices

Legislative amendments and increasingly rigorous enforcement practices under the Corruption of Foreign Public Officials Act (“CFPOA” or “the Act”) mark the robust developments taking place in Canada’s anti-corruption regime. Changes to the law and the enforcement thereof carry significant implications for companies and their corporate governance practices.

The CFPOA sets out as a criminal offence any payments made or other benefits provided to foreign public officials, which payments or benefits are made or provided with a view to obtaining or retaining a business advantage.

The accused may be a Canadian or foreign national in the form of a natural person, … Continue Reading

Disclosure requirements regarding women on boards and in senior management

Earlier this month saw the closing of the comment period for the Ontario Securities Commission’s (OSC) Staff Consultation Paper 58-401 Disclosure Requirements Regarding Women on Boards and in Senior Management. The paper proposes amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices such that TSX-listed companies (excluding venture issuers and investment funds) would have to meet disclosure requirements with respect to female representation on boards and in senior management.

The purpose of the OSC consultation paper is to enhance corporate governance by “advancing the representation of women” in leadership roles with a “comply or explain” system aimed at … Continue Reading

Pre-emptive Defensive Tactics Against Dissidents’ Ambush

This post was contributed by Walied Soliman, Partner, Norton Rose Canada, and Evelyn Li, Associate, Norton Rose Canada

A scan of recent business headlines suggests shareholder activism continues to rise, and even the who’s who of deep-rooted Canadian businesses are not immune.

While preparing for the upcoming proxy season, whether or not your company is at risk for a proxy contest, it might be a good idea to consider adopting certain pre-emptive defensive tactics, including a by-law to provide advance notice for nomination of directors as recently proposed by Arius3D Corp.

Proxy fights

Dissidents in a proxy contest typically look … Continue Reading

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