Affirming Your Poison Pill To Keep It Alive

On May 2, 2014, the British Columbia Securities Commission (the Commission) extended the life of the shareholder rights plan of Augusta Resource Corporation (Augusta) until July 15, 2014, provided that Hudbay Minerals Inc. (Hudbay) held its bid for Augusta shares open until July 16, 2014 and agreed to a ten-day extension in the event any shares were taken up by Hudbay. On June 24, 2014, the Commission released detailed reasons for the lengthy extension, which was, in part, responsive to Augusta needing until June 30, 2014 to obtain certain project permits that would help it maximize auction value.

In its reasons, the Commission emphasized the fact that Augusta's shareholder rights plan was approved by shareholders prior to the Hudbay bid, and then affirmed again in the face of the Hudbay bid. The Commission noted that a rights plan without a real transaction on the horizon is merely a "theoretical" exercise; by contrast, a shareholder's decision to keep a rights