Canadian reforms to make poison pills redundant

Author: Zoe Thomas | Published: 21 Dec 2014
Boards will now have more time to consider a bid
The latest version of a proposal to change Canada’s shareholder rights regime could render poison pills irrelevant.

It would impose a set time period for bids, limiting how long boards have to consider an offer, but also extending the timeline beyond existing precedent.

This latest plan is a compromise between earlier proposals from the Canadian Securities Administrators (CSA) and Quebec securities regulator. A number of divergent court rulings on whether to allow shareholder rights plans, known as poison pills, to stay in place has created uncertainty in the market.

The proposal should strike a balance by giving boards a statutory time limit to explore alternative options while also allowing shareholders to vote on offers.

"The hope is this will lead to fewer rights plans and fewer rights plans hearings," said Vincent Mercier, a partner at Davies Ward Phillips & Vineberg...