The Alberta Securities Commission (ASC) has temporarily upheld a
shareholder rights plan implemented by Canadian Oil Sands Limited
(COSL) for an additional 30 days in response to an unsolicited
takeover bid made by Suncor Energy Inc.
("Suncor"). COSL had defended its rights
plan on the basis that the 120-day tender period it required for
was necessary for shareholders to
evaluate recent developments related to COSL's business and
thus the value of Suncor's offer; and
was consistent with proposed
amendments to the Canadian takeover bid regime (the
The ASC did not apply the principles of the Proposed Amendments
in allowing the rights plan to endure for a total of 90 days.
However, a 90-day period appears to be a compromise between the
requirements of the Proposed Amendments and the 60 days Canadian
securities regulators have generally considered a reasonable period
for a rights plan to endure, depending on the factual
circumstances. While the ASC's reasons have not yet been
published, based on the evidence provided by COSL that it was in
discussions with four credible buyers, the ASC concluded that
allowing the COSL board an additional month to seek a better offer
than the Suncor bid was in the best interests of COSL's
The background to Suncor's bid is described in our October
27, 2015 Update, Hostile Bid for Canadian Oil Sands Foreshadows
Tactics Under Proposed Takeover Bid Regime. The rights plan in
question was implemented in response to Suncor's unsolicited
offer, which was structured as a "permitted bid" under
COSL's pre-existing rights plan. COSL's second rights plan
enhanced the "permitted bid" requirements in the
pre-existing rights plan such that Suncor's offer would trigger
substantial dilution unless it were to remain open for 120 days. In
substance, COSL was challenging Suncor to revise its bid to comply
with the Proposed Amendments or apply to the ASC for a cease trade
Implications of the Ruling
It is not clear whether Suncor will revise its bid to remain
open until January 4, 2016, the date the rights plan will be cease
traded. If Suncor extends its bid, COSL will likely continue
seeking a more favourable offer from other bidders; if Suncor does
not extend its bid, the auction for COSL will likely cease.
Reporting issuers should be aware that until the Proposed
Amendments come into force, the regulators appear to be generally
acting in accordance with current rules and principles (see also
our December 1, 2015 Update, BCSC Permits Private Placement in
Face of a Hostile Bid). All decisions regarding rights plans,
however, are highly contextual, and the regulators will tailor
remedies to their view of the facts and the shareholders' best
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).