Arrangement Agreement Canada

As might be expected, the plans of arrangement are not without drawbacks. For example, the acquisition loses control of timing, process, and documentation because the goal`s board of directors controls the process and preparation of the proxy circular. This would not be the case with a takeover bid made directly to the shareholders of the target company. In addition, a plan of arrangement is often a long process. Negotiations can be complicated and transactions can take three months or more. In addition, the length of the procedure may have the effect of making an agreement less flexible to a competing tender. After receiving the injunction, the objective must prepare and distribute a management proxy circular before the meeting. Assuming authorization has been obtained, the plan of arrangement will be submitted to the court for final approval. It is generally granted when the Tribunal finds that the plan is “fair and reasonable”. 2.01 The Director agrees with the view that the provisions of the Arrangement of the Act are intended to facilitate the implementation of the Act and notes that the arrangement provisions of the Act have been used by enterprises to carry out a wide range of transactions, such as.B. “spin-offs” of enterprises, mergers of enterprises, continuation of enterprises in or out of other legal services and so-called “going-private” transactions. 4.06 Although the provisions of subsection 192 (4) (d) of the Act (under which a court may order that shareholders be entitled to objection under section 190 of the Act) are more frank than binding, the Director is of the view that shareholders should normally be allowed to object to proposed agreements. Accordingly, in cases where an agreement does not grant rights of opposition and appreciation to shareholders, the director will carefully consider the reasons why they do not allow shareholders to derogate.

In this context, the Director considers that the applicant company should be prepared to justify (both in the documents submitted to the Director with the notification of the interim hearing and before the courts) why, on a case-by-case basis, it would not be appropriate to extend the rights of opposition and assessment to shareholders. In the absence of satisfactory justification, the Director may decide that it is appropriate to intervene before the courts at any preliminary or final hearing in order to raise objections to a proposal on that basis. Arrangement agreements generally provide that the specific steps and details of the agreement are set out in a “plan of arrangement” which is normally annexed to the agreement. The flexibility of the plan of arrangement for complex mergers and restructurings can be very attractive. In the M&A context, agreements often allow multi-level transactions to be concluded at once. 3.13 At the hearing of the application for a final injunction, the Tribunal will verify whether the conditions of the injunction have been met and will make its final decision on the fairness of the agreement. The Director will also have the opportunity to examine the agreement in final form when adopting the position adopted during the oral procedure. Although the Director will endeavour, prior to the interim hearing, to raise objections to an agreement proposed by the Director as soon as possible (provided that the requirements of the communication to the Director have been met), the Director is not bound, at the final hearing, by a position of the Director with regard to the apparent fairness of the agreement in the context of the interim negotiation. .

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