Canada: Silencing The Corus Of Dissent: OSC Denies Public Interest Standing To Activist Shareholder In Contested Acquisition Dispute

Last Updated: May 10 2016
Article by Christopher Horkins and Lorne Silver

When will disgruntled shareholders be permitted to access the "public interest" powers of the Ontario Securities Commission to dispute a contested transaction? A recent OSC decision addressed this question, taking a more restrictive stance on private party standing than in previous cases.

On April 25, 2016, the OSC released its reasons for its March 7, 2016, decision denying Catalyst Group Inc. (Catalyst) standing to bring an application under the public interest jurisdiction of the Ontario Securities Act for additional disclosure and the delay of a shareholder vote on the highly publicized $2.65 billion acquisition of Shaw Media Inc. (Shaw Media) by Corus Entertainment Inc. (Corus).1

Corus' Acquisition of Shaw Media

In January 2016, Corus announced that it had entered into an agreement with Shaw Communications Inc. (Shaw) to purchase all of the shares of Shaw's subsidiary, Shaw Media, the owner of Global Television and other specialty networks and digital platforms, for $2.65 billion in cash and shares. Corus' acquisition of Shaw Media represented a movement of assets within the Shaw corporate group, as both Corus and Shaw are controlled by the same majority owner, the Shaw Family Living Trust. Accordingly, Corus was required to comply with the rules governing related party transactions, as set out in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (MI 61-101), which requires, among other things, the approval of minority shareholders. Corus formed a special committee of independent directors to review and consider the proposed transaction and obtained a formal valuation and multiple fairness opinions in respect of the transaction.

On January 29, 2016, Corus filed a notice for a shareholder meeting to be held on March 9, 2016, to seek minority shareholder approval of the acquisition and delivered a management information circular on February 9, 2016.

Catalyst's Opposition Campaign and Application to the OSC

Shortly after Corus announced the acquisition, Catalyst, one of Canada's largest hedge funds, purchased a minority position in Corus' Class B shares (representing 0.4% of the issued and outstanding shares) and immediately began an active campaign in opposition to Corus' acquisition of Shaw Media, taking specific issue with the merits of the proposed acquisition transaction and the quality and adequacy of the disclosure made by Corus in its management information circular. Catalyst's campaign included complaints to the Company and to the OSC, various public statements criticising the proposed transaction, publication of  online digital presentations and a website, newspaper advertisements, investor conference calls and, ultimately, the issuing of a dissident proxy circular to shareholders in which Catalyst opposed the acquisition.

On March 4, 2016, only three business days before the shareholder meeting to approve the transaction, Catalyst filed an application with the OSC pursuant to section 127 the Ontario Securities Act seeking an order postponing the shareholder meeting until adequate disclosure was provided by Corus to its shareholders.2  Corus brought a cross-motion seeking to dismiss Catalyst's application on the basis it lacked standing. Shaw Media also sought and was granted leave to intervene.  OSC Staff took the position, supporting Corus' motion, that Catalyst should be denied standing to bring its application. Corus and Shaw succeeded in convincing the OSC to bifurcate the proceedings and consider Corus' motion on standing before hearing submissions on the merits of Catalyst's application, if necessary.

Standing Denied

The OSC determined that Catalyst lacked standing to bring its application and accordingly dismissed the application without any hearing on the merits. This represents the first time the OSC has denied standing to a private party to commence an application under the public interest jurisdiction provided by section 127 of the Securities Act.3

Section 127 provides the OSC with jurisdiction to intervene in capital markets and make orders where it is in the public interest to do so. A private party cannot bring an application as a matter of right, however, and must be granted standing before the application is allowed to proceed.

The OSC began by recognizing that granting of permission to a private party to bring an application under section 127 is an "extraordinary remedy" and that the applicant bears the onus of showing it is in the public interest for the OSC to grant that party standing to do so. The panel then looked at the factors set out in the 2009 MI Developments Inc. decision, where standing was granted to a private party on the basis that:

(a) the applications related to both past and future conduct regulated by Ontario securities law;

(b) the applications were not, at their core, enforcement in nature;

(c) the relief sought was future looking;

(d) the OSC had the authority to grant an appropriate remedy;

(e) the applicants were directly affected by the conduct (past and future); and

(f) the OSC concluded it was in the public interest to hear the applications.4

In MI Developments, and in the subsequent decisions following it before Corus, the OSC did not bifurcate the hearings, and the proceedings were decided on the merits after standing was granted in a single hearing. Many observers have interpreted MI Developments as setting a low bar to granting public interest standing under section 127 of the Act.

In Corus, however, the OSC took a more restrictive view as a result of the timing and basis of the Catalyst complaint and exercised its discretion to deny standing. The OSC noted that Catalyst's application raised "no novel issues" and placed considerable weight on the efforts made by Corus to comply with the requirements of MI 61-101. The OSC appears largely influenced by the extensive communication campaign by Catalyst, including its dissident proxy circular, in which Catalyst's concerns had "already been disseminated to Corus's shareholders though a variety of means" and had "already been widely considered in an active public debate." The OSC also specifically noted that there was no prima facie case of inadequate or misleading disclosure by Corus. Finally, the OSC was critical of the timeliness of Catalyst's application, which was filed mere days before the scheduled shareholder meeting. Allowing such a late intervention, the OSC found, could impact fairness, efficiency and confidence in capital markets and it declined to authorize any such late intervention in the absence of any critical issues relating to the transaction being raised.

Key Take-Aways

In Corus, the OSC sent a strong message to capital market participants seeking to engage the OSC's public interest powers in the context of a disputed transaction, namely that such avenue may not be so readily available.  Private parties will need to clearly demonstrate the need for such intervention to protect the integrity of the capital markets and will have to do so on a timely basis.

Read the full decision here.


1.  In the Matter of the Catalyst Capital Group Inc. and In the Matter of Corus Entertainment Inc.,> [Corus].

2.  Catalyst's application was limited to the adequacy of Corus' disclosure and did not include a broader attack on the merits of, or corporate governance process for, the acquisition transaction.

3.  The OSC has refused to hear applications under the analogous provision for interested party applications in takeover or issuer bids (s. 104 of the Securities Act).

4. MI Developments Inc., (2009), 32 OSCB 126 at paras. 109-110 [MI Developments].

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Christopher Horkins
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions