Guest post by Jacob Kojfman (Vancouver Securities Law)
A favorite topic of discussion of mine on Vancouver Securities Law has been take-over defence tactics. A recent Ontario Securities Commission (“OSC”) decision has emphasized what the OSC will consider to be valid reasons to keep a shareholder rights plan or “poison pill” in place.
For a while, it seemed as though the securities commissions could not get their reasons for keeping or overturning poison pills straight. Every decision that comes out of a securities commission now helps corporate counsel better advise their clients.
In a recent decision, the OSC hearing panel threw out the shareholder rights plan of Thirdcoast Limited, which was facing a hostile takeover from Parrish & Heimbecker, Limited. The reasons were that Thirdcoast’s rights plan was adopted in response to the hostile offer and there was no shareholder support, and there was no other viable option for Thirdcoast, and since P&H kept upping its offer, the poison pill had really run its course.
Once again, this decision reiterates the fact that a company should put together a shareholder rights plan well before it is faced with a hostile takeover. Shareholders should have an opportunity to vote on adopting the plan. A board of directors has to remember why it put the plan in place: to find other viable options for the company, and if none exist, then it is time for the poison pill to go.
Contact Jacob at: Jacob@vancouversecuritieslaw.ca
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