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 Canadian Securities Administrators (“CSA”) recently published a Staff Notice (the “Notice”) to report on the results of the reviews conducted  by the CSA within the scope of its Continuous Disclosure Review Program. The goal of this program is to improve the completeness, quality and timeliness of continuous disclosure provided by reporting issuers.

The focus on this post is mainly aimed towards the Notice’s guidance for continuous disclosure in the context of the coronavirus pandemic. In order to support investors in making informed investment decisions, CSA reminds reporting issuers to provide transparent disclosure, including information about the impact of COVID-19 on their operating performance, financial position, liquidity and future prospects. The guidance builds on information disseminated by the CSA earlier this year, as we have discussed in this previous blog post.
Continue Reading Canadian Securities Administrators publish Guidance on Continuous Disclosure in Time of COVID-19

Further to our earlier post discussing COVID-19 and Material Adverse Change (“MAC”) provisions in merger and acquisition agreements, and the procedural ruling in respect of the dispute involving Rifco Inc. (“Rifco”), ACC Holdings Inc. (“Purchaser”), and the Purchaser’s parent company, CanCap Management Inc. (“CanCap”), each of Rifco, the Purchaser and CanCap, (collectively, the “Parties”) settled

In late May 2020, BDO Canada and Fasken hosted a conversation with leading private equity (PE) firms on the slumping market conditions around the COVID-19 crisis. The panel identified two discrete steps in the PE response:

  1. Navigating current market conditions
  2. Emerging from these conditions to thrive

The webinar discussion featured Chad Danard of TriWest Capital Partners, Sameer Patel of Angeles Equity Partners, and Ted Mocarski of Novacap.

1.     Navigating current market conditions

The PE-portfolio company relationship

PE investing is a relationship-driven business. During times of uncertainty, strong integration between the firm and portfolio company is especially critical. To lead portfolio companies through a pandemic, PE firms have found it helpful to increase the frequency of communication touchpoints with management teams. This allows them to proactively address market softness and liquidity constraints.

In the near term, companies and firms can expect to switch from offensive to defensive strategies. Instead of focusing on growth opportunities, PE firms will add value by leveraging their past experience in economic downturns and offering advice related to capital preservation.
Continue Reading Private Equity Point of View: Navigating Through, and Emerging From, the Crisis

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

What is CSIS?

The Canadian Security Intelligence Service (“CSIS”) is Canada’s principal national intelligence service. CSIS investigates actions believed to constitute a threat to the security and safety of Canada. Arguably, CSIS’ role is even greater given the population’s need to trust and rely on its national intuitions, including its security and intelligence, during the COVID-19 pandemic.  CSIS’ uniquely defensive purpose is to monitor, collect and investigate Canada’s security threats, including economic espionage and foreign-influenced activities.

Canadian Intelligence Service’s 2019 Public Report

On May 20, 2020, CSIS issued a statement in connection with the recent release of its 2019 Public Report (“Report”).  The Report aims to provide, amongst other things, a summary of the threats to Canada and its national interests.  As globalization continues to dominate, the global community, including the potential threats that it may pose to national security, has a wider reach on Canadian businesses and Canadian life generally.

The Report discusses many topics relevant to Canada in 2018/2019, including the current state of terrorism and violent extremism and the ongoing need to protect democratic institutions, but the area of focus here is CSIS’ review as it relates to foreign investment and Canada’s economic security.
Continue Reading CSIS cautions on foreign investment’s potentially negative impact to Canadian businesses and economic security; tighter rules for foreign investment

On May 12th 2020 the Ontario Government not only extended the province’s declaration of emergencies, but also passed Bill 190, the COVID-19 Response and Reforms to Modernize Ontario Act, 2020 (Bill 190). Bill 190 makes slight, but significant, changes to many statutes to provide flexibility and relief to businesses and corporations at

On May 20, 2020, Canadian Securities Administrators (CSA) issued a news release to announce that the CSA has published new local blanket orders (New Blanket Orders) for market participants that provide a 45-day extension for periodic filings normally required to be made by non-investment fund issuers between June 2, 2020 and

According to the 2019 ABA Private Target M&A Deal Points Study, in the US 52% of purchase agreements examined included references to representation and warranty insurance (“RWI”)[1]. While this trend seems less pervasive in Canada, we are witnessing a growing trend where buyers and sellers are turning to RWI as an additional coverage to standard indemnity mechanisms. This trend, combined with a reduction in M&A activity in light of the COVID-19 pandemic, has led to growing competition among insurers and increased negotiation power for parties seeking RWI. While some companies may struggle with a significant loss in share value, assets may still be valuable to potential buyers, resulting in an anticipated increase in asset-based transactions. In addition, the pandemic will surely give rise to an increase in distressed transactions with buyers turning to RWI as a source of protection for breaches in representations and warranties, including possibly fundamental representations and warranties. We have summarized below key insights and takeaways regarding the current RWI market in Canada to help parties when deciding which policy best fits their needs.


Continue Reading Diagnosing the impact of COVID-19 on representation and warranty insurance

The global coronavirus pandemic has undoubtedly had an impact on businesses and M&A activity worldwide.  In light of current events, companies negotiating deals and the lawyers penning the contracts are paying closer attention to the paperwork.  In particular, careful drafting and thoughtful consideration of the Material Adverse Change (MAC) and Material Adverse Effect (MAE) clauses in transaction agreements (see our previous posts on MAC provisions) and a potential Canadian court decision on MAC clauses (see our previous post of April 30, 2020 and May 7, 2020), as well as the target company’s covenants, representations and warranties and the buyer’s closing conditions related to such representations and warranties, have proven especially important in how parties have been responding to the onset of the pandemic.

In recent months, we have seen a number of attempts in the U.S. to terminate deals on the basis of the impact of the pandemic to target companies’ businesses.  
Continue Reading Terminations of M&A Transactions: Lessons Learned from Victoria’s Secret and WeWork