On May 2, 2014, the British Columbia Securities Commission (the
Commission) extended the life of the shareholder
rights plan of Augusta Resource Corporation
(Augusta) until July 15, 2014, provided that
Hudbay Minerals Inc. (Hudbay) held its bid for
Augusta shares open until July 16, 2014 and agreed to a ten-day
extension in the event any shares were taken up by Hudbay. On June
24, 2014, the Commission released detailed reasons for the lengthy
extension, which was, in part, responsive to Augusta needing until
June 30, 2014 to obtain certain project permits that would help it
maximize auction value.
In its reasons, the Commission emphasized the fact that
Augusta's shareholder rights plan was approved by shareholders
prior to the Hudbay bid, and then affirmed again in the face of the
Hudbay bid. The Commission noted that a rights plan without a real
transaction on the horizon is merely a "theoretical"
exercise; by contrast, a shareholder's decision to keep a
rights plan in the face of an available take-over bid is a true
economic choice, which the Commission found provided better
guidance as to actual shareholder intention. The Commission also
took comfort in the fact that approval levels for the plan from
before the bid corresponded well with approval levels once the bid
had been made, suggesting consistent shareholder support.
The Augusta decision sends a clear message to
corporations with existing shareholder rights plans, are subject to
a hostile takeover bid, and need more time to complete a market
canvas to maximize shareholder value: in the face of a hostile bid,
shareholder affirmation of an existing rights plan may provide
strong justification to allow the rights plan to continue beyond
what securities regulators might normally permit, in order to allow
the target company more time to seek a better bid. Of course, a
vote to affirm a plan is not without risk – given the
Commission's comments on the significance of consistent
shareholder support, any significant drop in support after a
hostile bid is made could stop a rights plan dead in its
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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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