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Decreasing the Data Deficit: Improving Canada’s Drug Regulatory System: Paper by Trudo Lemmens & Shannon Gibson now publicly available on SSRN.

Financial Post

This week, the Canadian Securities Administrators (CSA) published draft rules under which a takeover bid would have an irrevocable 50 percent minimum tender condition. Once met, the rules would require an additional 10-day right to tender for undecided shareholders.

The bid, however, would also remain open for a minimum of 120 days. The 50 percent condition is laudable, because it offers effective decision-making capacity on the part of shareholders. The 120-day requirement, however, would cause uncertainty in the market, to the detriment of target shareholders, and of bidders.

The CSA proposal seeks to strike a balance that might lessen the prominence of litigation relating to shareholder rights plans or “poison pills.” The bidder must obtain a “majority of minority” approval before it can take up shares; securities of the bidder and its joint actors would not be counted in the 50 percent. The advantage is that a minority of shareholders cannot force the majority to sell control.

The proposal would therefore likely sound the death knell for some pills such as the “just say no” pill, whereby the bidder can remove the pill only via a proxy contest. But it would prevent bidders from being able to corner target shareholders into the undesirable choice of selling into an underpriced offer or being stuck with illiquid shares.

 NOTE: This article first appeared in the Financial Post, November 20, 2014 

A selection of the shortcomings of the “Cooperative Capital Markets Regulatory System” (CCMRA), a cooperative enterprise between the federal government and five provinces to create a one-stop securities regulator, have been discussed in these pages in recent days. The CCMRA, if adopted, would be a watershed event in the architecture of Canada’s political institutions. And in no way for the better. 

Since the Great Depression, the rise of the welfare state has been associated with a vastly expanded role for government, and this vast expansion has received its expression in the commensurate growth of the administrative state. Government administrators, who exercise powers delegated to them by government, have tentacles into virtually every walk of life, from the TV we watch to how we behave in the workplace to the pedigree of the hamburgers we throw on the barbie in the summer.