Securities Regulation

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: the following first appeared in the Financial Post, December 10, 2014

Two weeks ago on this page I presented detailed and extensive criticisms of the Cooperative Capital Markets Regulatory Authority (CCMRA), which aims at creating a one-stop securities regulator for B.C., Ontario, N.B., P.E.I. and Saskatchewan (and whatever other provinces and territories might choose to sign on). In a response to my criticisms, Phil Anisman dismissed my views “tendentious, overstated and often incorrect.” On the contrary, I believe that they are fair, balanced, and accurate. The factual errors are Mr. Anisman’s, not mine. As this debate has already consumed a lot of space, I will limit the scope of my comments here (although a longer and more detailed version is available online at FT Comment).

Phil Anisman’s detailed critique of my series of opeds on the Cooperative Capital Markets Regulatory Authority (which aims at creating a one-stop securities regulator for all of B.C., Ontario, Saskatchewan, N.B., and P.E.I., and any other jurisdictions that may sign on) are “tendentious, overstated and often incorrect.” In fact, they are air, balanced, and accurate. The factual errors are his, not mine.

 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. 

Note: the following was first published in the National Post, Nov. 20, 2014

A shiny bright “Cooperative Capital Markets Regulatory System” (CCMRA), a cooperative enterprise between the federal government and five provinces to create a one-stop securities regulator, is set to hit the show room floor next September. Regrettably, instead of a Porsche Carrera, it looks much more like a Ford Edsel.

For some years now, the federal government has been hell bent for leather to supplant Canada’s existing 13 securities regulators (10 provincial and three territorial) with a single pan-Canadian regulatory body. In 2011, however, the Supreme Court of Canada ruled that that the federal government’s constitutional authority in the securities law domain is limited to matters of systemic risk affecting the country as a whole. As discussed in this space yesterday and the day before, the CCMRA is thus an attempt to marry the respective constitutional authorities of provincial and federal governments in a single entity. To date, five provinces (B.C., Ontario, Saskatchewan, N.B., and P.E.I.) have signed on. They will all adopt common legislation that will be administered by a common regulatory authority called the “Capital Markets Regulatory Authority” (CMRA). In like fashion, the feds will adopt the “Capital Markets Stability Act” and delegate their power to administer this statute to the CMRA.

Note: the following first appeared in the National Post, Nov. 19, 2014

Many are still unaware that a major proposal to reform our securities regulatory system is now on the table. The “Cooperative Capital Markets Regulatory System” (CCMRA) will replace the securities regulators in five provinces (Ontario, B.C., Saskatchewan, N.B., and P.E.I.) with a new regulator to be called the “Capital Markets Regulatory Authority” (CMRA). Each participating province will adopt a common statute (the “Provincial Capital Markets Act”) and delegate its authority to administer the statute to the CMRA. The federal government will adopt the “Capital Markets Stability Act” (CMSA) and also delegate its authority to administer that statute to the CMRA. In theory, this is supposed to reduce the burden on capital market actors by replacing five distinct regulatory authorities with one. The reality is far different. As discussed Wednesday in this space, business is going to be hit with a category 5 blizzard of red tape that will make Hurricane Katrina look like a zephyr.