In its Reasons for Decision in Aimia Inc. (Re), 2024 ONCMT 17, the Capital Markets Tribunal articulated its rationale for granting the respondent's preliminary motion to dismiss an application for an order under section 104 of the Ontario Securities Act (the Act). The motion was granted because the applicant, Aimia Inc. ("Aimia"), was found to have waited too long to commence its application. As such, the Tribunal considered Aimia's application to be a misuse of its procedure.
In February 2024, Aimia brought an application under section 104 of the Act alleging that one year earlier, in February 2023, Mithaq, a shareholder of Aimia, had been acting jointly and in concert with others when it acquired securities of Aimia. Aimia alleged that the joint actors' combined shareholdings exceeded 20%, and that their subsequent acquisitions of shares of Aimia constituted deemed take-over bids, triggering an obligation upon Mithaq to make an offer to all shareholders to acquire their shares at the same price. In its application (commenced 2 days prior to the expiry of a formal, unsolicited take-over bid for Aimia by a subsidiary of Mithaq), Aimia sought an order from the Tribunal under section 104 requiring Mithaq to make such an offer.
The Tribunal rejected Mithaq's argument that Aimia lacked standing to bring the application. Assuming Aimia's allegations to be true, at the time that it launched the application under section 104 in February 2024, it was an issuer whose securities were the subject of a deemed take-over bid made a year prior, and thus it was an "offeree issuer" and "interested person" under section 89(a) of the Act. In that regard, the Tribunal noted that unlike a formal bid that has an expiry date, a deemed take-over bid does not. "Where an issuer asserts that an acquiror made a deemed bid but failed to follow up with an offer to all shareholders as required, that alleged deficiency persists until cured." The Tribunal declined to impose a specific time limit for when an applicant has standing to bring a section 104 application in those circumstances.
However, Aimia's delay in launching its application was relevant to whether the application should be allowed to proceed to a hearing on the merits. The Tribunal observed that the orders available under section 104 are not in the nature of sanctions. Rather, "[s]ection 104 of the Act empowers the Tribunal to fix a wrong that is occurring, or has occurred, in the context of a live take-over bid".
As such, it was incumbent upon Aimia to have brought its application expeditiously. Instead, it delayed in commencing its application for more than a year, during which time a number of significant changes occurred, including in its share price, in the composition of its board and senior management, and in Mithaq's shareholdings in Amia. It offered no persuasive reason why it could not have sought relief under section 104 sooner.
Aimia's submission that it should not have done so because it had made the joint actor allegations in civil litigation was rejected. The Tribunal noted that Aimia hadn't sought relief under section 105 of the Act in that litigation, which gives the Ontario Superior Court of Justice jurisdiction to make such order as it thinks fit if it finds that a person or company has not complied with the take-over bid requirements in Part XX of the Act. Accordingly, an order under section 104 to rectify the allegedly non-compliant situation "simply did not make sense at this stage, given the passage of time and the intervening events".
For our commentary on the related decision in Mithaq Canada Inc. (Re), 2024 ONCMT 9 where the Capital Markets Tribunal articulated its reasons for denying an application by Mithaq to cease trade a private placement by Aimia see: "Mithaq Canada Inc. (Re): Exercise of the Capital Markets Tribunal's Discretion Whether to Cease Trade a Private Placement as "Clearly Abusive"
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