Canada: Soliciting Dealer Arrangements—CSA Staff Notice 61-303 And Request For Comment

Last Updated: April 27 2018
Article by Jon C. Truswell, Justin R. Lambert and Alexander Baker

The Canadian Securities Administrators (CSA) published Staff Notice 61-303 and Request for Comment (the Notice) on April 12, 2018, which outlines issues that the CSA has identified regarding the use of soliciting dealer fee arrangements in proxy contests and corporate transactions. The CSA has proposed no rule changes at this time and is seeking input generally and in response to specific questions (our experience in the past is that members of the CSA have taken different views on the use of soliciting dealer fees). However, it is clear that as a result of the recent use of this mechanism in the proxy contest for board control of Liquor Stores N.A. Ltd., there is renewed interest in these types of arrangements and their impact on market participants. Comments must be submitted by June 11, 2018.

Purpose of Soliciting Dealer Arrangements

Generally, soliciting dealer fee arrangements refer to agreements between an issuer and registered investment dealers under which the issuer agrees to pay the dealer(s) a fee in event that such dealer(s) successfully solicit securityholder support for a particular matter. Most often, these arrangements may be used to incentivize dealers to solicit securityholders to: (i) vote on a matter requiring securityholder approval; (ii) tender securities in connection with a takeover bid ; or (iii) participate in a rights offering, exercise rights to redeem or convert securities or, in connection with a corporate transaction , attain the quorum needed to amend documents affecting securityholders.

Under these arrangements it is common for the issuer's payment of fees to the dealer(s) to be contingent on the successful solicitation of securityholders by the dealer(s). In other words, unless a securityholder votes "for" a particular matter requiring securityholder approval no fees will be paid to the dealer(s) by the issuer. Further, it is standard practice in these arrangements that the fees paid are subject to a minimum or maximum value.

Use of Soliciting Dealer Fee Arrangements

These arrangements are common, and are not traditionally controversial, in the context of takeover bids and plans of arrangement, although our experience has been that in the context of a hostile takeover bid, the imposition of soliciting dealer fees has significantly increased the tender percentage.

However, such arrangements have also been used by issuers in Canada in proxy contests to solicit votes in favour of an incumbent board, and this use has caused controversy. In 2017, PointNorth Capital (to whom Bennett Jones was counsel) initiated a proxy contest to replace certain of the directors on the board of Liquor Stores N.A. Ltd. and previously, in 2013, JANA Partners initiated a similar proxy contest involving Agrium. In each case, the issuer offered to make payments to soliciting dealers only for votes cast in favour of the election of the issuer's incumbent board, and such payments would only be made if the incumbent board was re-elected. In Liquor Stores the payment of soliciting dealer fees was challenged before the Alberta Securities Commission, but that Commission allowed it to proceed. In Agrium, the company prevailed. In Liquor Stores, PointNorth prevailed despite the payment of soliciting dealer fees.

Rationales for Soliciting Dealer Fee Arrangements from the Issuer's Perspective

Issuers often encounter practical difficulties with reaching out to , and communicating directly with, retail investors who are objecting beneficial owners (OBOs) under applicable securities laws, and issuers view soliciting dealer arrangements as a means to incentivize dealers to communicate the issuer's message to retail OBOs. Communication with OBOs can be valuable to issuers because proxy solicitation firms retained by an issuer may be able to communicate with non-objecting beneficial owners, and may possess insights regarding significant security holders, but they are often unable to identify and communicate with retail OBOs.

Issues with Soliciting Dealer Arrangements

The public interest questions that arise from soliciting dealer arrangements affect the integrity of the tendering process or securityholder votes. The use of such arrangements to entrench the board and management may raise issues regarding the proper discharge of the fiduciary duties of directors. They also raise other securities regulatory issues, including from the perspective of the dealer, issues regarding the proper management of conflicts of interest as well as issues relating to securities laws governing proxy solicitations.

The Notice was published with a view to aiding the CSA in assessing whether additional guidance or rules in respect of those arrangements is appropriate. To that end, the CSA went out with 14 specific questions for comment. At this time, the likelihood of regulatory intervention cannot be predicted; however, it is safe to say that any soliciting dealer arrangements used going forward, particularly in the context of proxy battles, will be closely scrutinized.

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.

Jon C. Truswell
Justin R. Lambert
Similar Articles
Relevancy Powered by MondaqAI
Stikeman Elliott LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Stikeman Elliott LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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