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OSC Considers Standalone Rule on Poison Pills

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In a recent panel discussion at the Toronto Board of Trade, Naizam Kanji, Deputy Director of Corporate Finance at the Ontario Securities Commission (the “OSC”) stated that the OSC is currently considering the implementation of a standalone rule in respect of poison pills.

Currently, poison pills are reviewed on a case by case basis, an approach which Mr. Kanji described as “problematic”. Under the new regime, poison pills would be removed from the current defensive tactics policy (NP 62-202) and companies would be permitted to use poison pills to block unsolicited bids provided that the poison pills were approved by shareholders at the most recent annual general meeting or in the face of an unsolicited bid. The new regime would allow poison pills to remain unchallenged provided that the necessary shareholder approval had been obtained and shareholders would be permitted to remove poison pills on a vote in favour of doing so.