The Problem of Coercion and Proposal for Reform
|Area||Corporate Finance and Securities|
Article originally published in Federated Press, Corporate Financing, Volume XVII, No. 2.
In Ontario, Part XX of the Securities Act (the “Act” and with corresponding rules and regulations, the “Ontario take-over bid regime”) governs take-over bids. The Act defines a take-over bid as an offer to acquire outstanding voting or equity securities of any class of a company that, if acquired, would result in the offeror acquiring an aggregate of 20% or more of the outstanding securities of that class. Since there is nothing in the Act that requires an offeror to bid for all the issued and outstanding securities of a target company, an offeror may bid for some of the outstanding securities of that company, allowing the offeror to acquire de facto control without acquiring the entire company. This is known as a partial bid. There are currently no rules in the Ontario take-over bid regime specific to partial bids. If a partial bid is made for 20% or more of the outstanding securities of a class of the target company, the bid must comply with the Ontario take-over bid regime.