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Introduction

On August 3, 2021, the Canadian Securities Administrators (CSA) announced their plan to “consolidate the functions” of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). The consolidation will create a new single self-regulatory organization (New SRO) with the goal of providing enhanced regulation of the investment industry. The CSA will also consolidate the two existing investor protection funds into a single protection fund independent from the New SRO.  The CSA plans to implement the New SRO in two phases, described below.
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Continue Reading CSA to Combine IIROC and MFDA in a Single Self-Regulatory Organization

Introduction

Recently, the Ontario Securities Commission (“OSC”) released its reasons for a September order dismissing an application for exemptive relief from the minimum tender requirement under Canada’s securities take-over bid regime.[1] ESW Capital, LLC (“ESW”), the largest shareholder of Optiva Inc. (“Optiva”), sought the relief in connection with a contested proposed take-over bid involving shares of Optiva (“Voting Shares”). The application is the first instance in which a Canadian securities regulator has been asked to grant exemptive relief from the minimum tender requirement. The OSC concluded that “there were no exceptional circumstances or abusive or improper conduct that undermined minority shareholder choice to warrant intervention…[and that] predictability is an important aspect of take-over bid regulation and [OSC] must be cautious in granting exemptive relief that alters the recently recalibrated bid regime”.
Continue Reading OSC Releases Reasons for Rejection of Application to Waive Minimum Tender Condition

Several months ago we asked whether a COVID-19-related impact on a business might constitute a “Material Adverse Change” (referred to as a “MAC,” or a material adverse effect, “MAE”) under merger agreements, and we noted the near complete absence of case law on the issue in Canada (see: “COVID-19 and Material Adverse Change Provisions…

The Ontario Securities Commission, like several other regulatory investigators, has extensive power to compel testimony and require the disclosure of documents and information.  A recent decision of the OSC, B (Re) (2020 ONSEC 21), has highlighted a gap in the Commission’s power to compel testimony from a witness where such testimony may constitute a breach of the witness’s contractual obligations to a third party.

The Case

Staff of the Commission is conducting an investigation pursuant to an investigation order issued by the OSC under section 11 of the Securities Act.  Investigation orders empower Staff to issue a summons pursuant to section 13 of the Act, to compel an individual to provide oral testimony under oath and to provide documentary evidence.  Section 16 of the Act prohibits the recipient of a summons from disclosing information relating to the summons or the investigation, subject to narrow exceptions.

Staff served upon an individual, identified only as “B”, a summons under section 13 of the Act.  Although B was prepared to cooperate with Staff, B was concerned that doing so would violate B’s employment contract, which imposes confidentiality over all matters relating to B’s employment without an exception that is relevant to a regulatory investigation.
Continue Reading Recent OSC Decision Raises Uncertainty for Witnesses Responding to a Summons

Introduction

On June 25, 2020 the Canadian Securities Administrators (“CSA”) released their Consultation Paper 25-402 – Consultation on the Self-Regulation Organization Framework (“Consultation Paper”). The Consultation Paper discusses seven key issues of the existing framework for self-regulatory organizations (“SROs”) and is seeking feedback from industry representatives, investor advocates, and the public on how the innovation…

The Deal 

On December 15, 2019, United Kingdom-based Cineworld Group plc (“Cineworld”), the second largest cinema chain worldwide, entered into an arrangement agreement (the “Arrangement Agreement”) with Cineplex Inc. (“Cineplex”) whereby Cineworld would acquire all of the issued and outstanding shares of Cineplex for $34 per share in cash, representing a premium of 42% to…

Further to our earlier post discussing COVID-19 and Material Adverse Change (“MAC”) provisions in mergers and acquisitions agreements and the hearing held last week in connection with an application for the final order (“Final Order Application”) in respect of the proposed plan of arrangement (the “Arrangement”) involving Rifco Inc. (“Rifco”), an alternative auto financing company…

Introduction

The Yukon Court of Appeal recently released its decision in Carlock v. ExxonMobil Canada Holdings ULC,[1] overturning the Supreme Court of Yukon’s unexpected decision to award dissenting shareholders a 43% premium over the negotiated deal price in ExxonMobil Canada Holdings ULC’s (“ExxonMobil”) acquisition of InterOil Corporation (“InterOil”) in 2017.

The Court of…

Last month, federal prosecutors achieved a resounding victory in a tipping case before the U.S. Supreme Court in Salman v. United States, 580 U. S. ____ (2016).  In its much anticipated decision, the Court held that a jury could infer that the tipper personally benefited from making a gift of confidential information to a…