A select group of senior executives and in-house counsel
interested in cross-border M&A disputes recently had a special
opportunity to hear Vice Chancellor Travis Laster of the Delaware
Court of Chancery speak in Toronto about his thoughts on some
thorny M&A issues and their treatment under a continuum of
legal regimes ranging from Pennsylvania, to Delaware of course, to
Canada and to the United Kingdom. VC Laster was invited by McCarthy
Tétrault to provide the keynote speech at a seminar put on
for its clients and friends entitled M&A Disputes:
Perspectives from Both Sides of the Border. Participants were
treated to a highly animated and entertaining commentary on the
availability and effectiveness of defensive tactics and potential
investment banker conflict scenarios among other sources of M&A
disputes. VC Laster is the newest Vice Chancellor appointed to
Delaware's renowned Court of Chancery and at the time of his
appointment only 39 years old. VC Laster's reputation is that
he has become one of the court's boldest judges and his remarks
did not disappoint.
With respect to defensive tactics, VC Laster's thesis was
that law governing defensive tactics should find itself in the
"enlightened middle". He conceded that the enlightened
middle can easily become "muddled" at times. An efficient
middle path on the issue of defensive tactics should, in VC
Laster's view, maximize value promoting deals and minimize
value destroying deals. He left for another day making any comments
on transactions that cause value to leave one jurisdiction for
VC Laster explored the roots of what he viewed as very
disjointed regulation of sell-side activity in the United States
unlike the investment bank cartel origins of equivalent regulation
in the UK. It is with this perspective that he views Delaware's
Court of Chancery as stepping into a regulatory void in applying
common law principles to the review of directors' conduct in
satisfying their fiduciary duties to the corporation.
With several caveats, but still in keeping with his trademark
boldness, VC Laster offered his observations on the Canadian
patient that is defensive tactic regulation. After a quick read of
the Supreme Court of Canada's decision in
BCE and National Policy 62-202 Take-over Bids
– Defensive Tactics, VC Laster's diagnosis
was schizophrenia with touch of bipolar disorder. While VC Laster
found it difficult to reconcile the constituency based approach
that he took from the BCE decision with the stockholder
focused/market integrity based approach of NP 62-202, he saw an
opportunity for Canadian treatment of defensive tactics to achieve
an enlightened middle ground.
VC Laster's remarks were actively discussed by a panel made
up of McCarthy Tétrault panellists Gary Girvan, Paul Steep and the Honourable James Farley. The panel discussion
was VC Laster's venue for his final advice to directors
wrestling with the continued use of defensive tactics. His advice
was to focus on the duty of loyalty that is a part of their
fiduciary duties and assume that all of the stock of the company
was held by a loved one and that the directors must make a decision
on behalf of that loved one to either to "take the money and
run" or manage the corporation for greater long term
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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