Augusta’s Rights Plan – BCSC Releases Reasons For Decision

On June 27, 2014, the British Columbia Securities Commission (BCSC) released the reasons for its May 2, 2014 decision declining to immediately cease trade the shareholder rights plan (also known as a "poison pill") of Augusta Resource Corporation (Augusta) in the face of a hostile take-over bid for Augusta made by HudBay Minerals Inc. (Hudbay). In its decision, the BCSC allowed the rights plan to remain in place until July 15, 2014, an unusually long 156 days from the announcement of the bid.

Notwithstanding marketplace speculation that Augusta marked a potential change in approach by the BCSC due to the extended period of time that the plan was allowed to remain in place, the BCSC's reasons reaffirm the traditional approach of Canadian securities regulators to the regulation of shareholders rights plans (that it is "when, not if" the plan should go), but do provide new guidance on how a shareholder vote affirming a rights plan in the face of a hostile bid can impact