CANADA: Quebec government publishes report on hostile takeover bids

Tuesday February 25 2014

The Parti Québécois minority government has published the Report of the Task Force on the Protection of Québec Businesses.

This report sets out the following proposals:

• Amending legislation to make possible the adoption of variable voting rights according to the length of time that the shares of corporations are held;
• Amending legislation to allow for the adoption of provisions to prohibit certain transactions by corporations subject to a takeover bid not approved by the board of directors – proposals include

1. a five-year prohibition against the merger or other amalgamation of the bidder’s and the target’s assets or a substantial sale of assets representing 15% or more of the target’s assets;
2. a requirement that a bidder remit to the target any profits made in the 24 months after the takeover bid from reselling shares of the target purchased by the bidder during the 12 months preceding the launch of the bid;
3. a prohibition against removing, before the end of his or her term, any director in office at the time of the bid; and
4. a bar against the exercise of a bidder’s voting rights in respect of the shares it holds after the launch of the takeover bid, subject to being restored by special resolution of the other shareholders).

Note also that in March 2013, the Quebec securities regulator the AMF published a wider public consultation on defensive tactics in takeovers – see further our previous update.

Click on the above link for the report.