Payment for Securities (investor protection generally)

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You can grab notes on other topic from here.

  • You can attach any condition you want to your bid, except financing
  • Best to have AS FEW CONDITIONS as possible on the offeror’s bid: sounds good to attach conditions to a bid and protect themselves (e.g. being able to get out of it), but at end of the day, you want to win. Best way to win is to have as clean a bid as possible. If you have conditions attached, makes it less attractive, opportunities for others to beat you (although sometimes you need conditions ^ e.g. conditional upon me getting 2/3rds of shares, Competition Act approval, CRTC approval, etc. (e.g. Astral BCE ^ BCE made bid to buy Astral, conditional on CRTC approval, CRTC turned it down)

Biggest difference b/w Canada and US

  • One condition you CANNOT do in Canada is making your bid subj to financing

o In US: I can say “I want to make bid for 100% of apple, and hope I find the $” o In Canada: can’t make takeover bid unless you can reasonably show that you can come up with $

POLICY: Cant put company into chaos and then not be able to complete it

$$ Problem:

  • Very expensive, when you need standby loan from bank for $1b, charge you a shit ton of interest to have it there for you (to give you right to be able to call It if you need it) ^ why there are fewer takeover bids in Canada
  1. Section 97.3: Financing Arrangements
  2. (1) If a formal bid provides that the consideration for the securities deposited under the bid is to be paid in cash or partly in cash, the offeror shall make adequate arrangements before the bid to ensure that the required funds are available to make full payment for the securities that the offeror has offered to acquire.
  3. Legislative Goal Met

Investor protection: Doesn’t really reach one of 3 obj, but does protect investors, you have to be able to complete the bid, can’t put everything in complete chaos and then not go through with it b/c you couldn’t get financing

  1. Payment for Securities (investor protection generally)
  2. Section 98.3: Obligation to Take Up and Pay for Deposited Securities
  • (1) If all the terms and conditions of a formal bid have been complied with or waived, the offeror shall take up and pay for securities deposited under the bid not later than 10 days after the expiry of the bid or at the time required by subsection (2) or (3), whichever is earliest.
  • (2) Same: An offeror shall pay for any securities taken up under a formal bid as soon as possible, and in any event not later than three business days after the securities deposited under the bid are taken up.
  • (3) Same: Securities deposited under a formal bid subsequent to the date on which the offeror first takes up securities deposited under the bid shall be taken up and paid for by the offeror not later than 10 days after the deposit of the securities.
  1. Legislative Goal Met

investor protection: Doesn’t really reach one of 3 obj, but does protect investors, have to make sure they get paid within a reasonable time after tendering their shares (protecting their reasonable expectations)

You can grab notes on other topic from here.


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