On March 3, 2014, each of Osisko Mining Corporation
("Osisko") and Goldcorp Inc.
("Goldcorp") announced the settlement of
proceedings that Osisko commenced in the Quebec Superior Court in
connection with Goldcorp's unsolicited take-over bid for
Osisko. Osisko alleged that Goldcorp breached a standstill
agreement allegedly existing between the two parties and improperly
used confidential information in making the bid. Although the
litigation was settled, the dispute highlights the critical
importance of confidentiality and standstill agreements in M&A
The issues raised in the proceeding included:
Whether the parties orally agreed to extend the standstill
under an earlier agreement that had expired. This highlights the
realities that, while oral agreements are enforceable, their
existence and terms can be difficult to prove and depend on the
credibility of the parties' evidence. This underlines the
importance of clarifying any intended understanding concerning
confidentiality and standstill arrangements.
The challenges in dealing with allegations of improper use or
disclosure of confidential information in a hostile bid (given the
evidentiary challenges that will often be faced by parties
attempting to enforce a confidentiality agreement).
Whether a confidentiality agreement can restrict the
parties' activities after the agreement has terminated because
of potentially continuing limitations on the purpose for which
information can be used. Although this issue has been previously
considered by the courts in both Canada (in the decision of the
Ontario Superior Court of Justice decision in RIM v.
Certicom; see our update entitled "Implications of
the Certicom Decision for Confidentiality Agreements")
and Delaware (in the decision of the Court of Chancery in
Martin Marietta Materials, Inc. v. Vulcan Materials
Company; see our update entitled "Stuck in
"Between": Delaware Court Stops Bid Due to Breach of
Confidentiality Agreements"), practical issues remain.
For example, the need (and if so how) to effectively sequester
individuals who had access to the target's confidential
information to insulate the bidder from claims that confidential
information has been improperly used.
According to public disclosures made by Osisko and Goldcorp, in
the uncertainty associated with the litigation:
Goldcorp agreed not to take up and pay for shares deposited to
its take-over bid before April 15, 2014 (just slightly longer than
three months from the January 13, 2014 launch date).
Osisko agreed (i) to terminate the Quebec court proceedings,
(ii) to waive the application of its shareholder rights plan on the
earlier of April 15, 2014 and the date Osisko enters into or
announces any third party transaction, (iii) to provide Goldcorp
access to due diligence materials beginning on the earlier to occur
of April 1, 2014 and the date that Osisko enters into or announces
any third party transaction, and (iv) not to close an alternative
transaction before April 15, 2014.
The dispute between Osisko and Goldcorp relating to
confidentiality understandings reaffirms the importance of having
clear, thoughtfully conceived and well drafted confidentiality and
standstill agreements. Ambiguities in agreements of that nature can
have profound and often unintended effects on M&A transactions.
Additionally, where an unsolicited transaction is a possibility,
care should be taken to understand the possible implication of less
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific 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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