As we described in a previous
blog post, the Ontario Court released a decision in March
(Champion Iron Mines Limited) in which it held that a
fairness opinion that does not disclose the analysis underlying the
opinion was inadmissible as evidence before the Court on an
application to approve a plan of arrangement. The decision of
Justice David M. Brown suggested that companies might need to
bolster their disclosure of fairness opinions in order for an
Ontario Court to take the opinion into account in a fairness
hearing for a plan of arrangement.
recent decisions, however, suggest that the Ontario Court has not
yet reached a consensus view on this issue.
In Bear Lake Gold Ltd.,
(Re), 2014 ONSC 3428, Justice Wilton-Siegel indicated that
he does "not share" Justice Brown's concerns related
to fairness opinions. Justice Wilton-Siegel held that a fairness
opinion is not intended as expert evidence in fairness hearings
where the transaction involves the acquisition of an issuer's
securities by a third party. Instead, the fairness opinion is
used by the court as an indicium that an arrangement has been put
forward in good faith and that it is fair and reasonable. The
fairness opinion is relevant for this purpose, according to Justice
Wilton-Siegel, for two reasons:
"First, it is evidence that the
special committee or board of directors has considered the fairness
and reasonableness of the proposed transaction on the basis of
objective criteria to the extent possible. Second, the
publication of the fairness opinion in the information circular
allows the shareholders to reach their own conclusions regarding
the integrity of the directors' recommendations and regarding
the fairness of the transaction to them from a market perspective.
The absence of shareholder objections therefore becomes a relevant
consideration for a court."
Justice Wilton-Siegel concluded that
"there is no compelling reason to depart from the existing
practice regarding the use of fairness opinions" in these
circumstances. He noted that in contested situations, if a party
submits a fairness opinion as expert evidence, the detailed
analysis underlying the fairness opinion would need to be available
"if required by any objecting securityholders".
In Re Patents Royal Host
Inc., which was released the day after Bear Lake,
Justice Newbould indicated that he agreed with the analysis and
opinion of Justice Wilton-Siegel in Bear Lake.
As a result of these decisions, it
would seem that the Ontario Court's position on fairness
opinions and related disclosure is not quite settled. It remains to
be seen how the Court (or a particular judge) might approach this
issue in circumstances where other indicia of the arrangement's
fairness are less compelling than they were in these cases. In the
meantime, issuers should consider this issue carefully with counsel
in the particular circumstances of each transaction.
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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