BCSC Releases Reasons in Lions Gate Decision

Article by Michael T. Waters , Paul A.D. Mingay , Nigel P. Cave and David R. Surat and

On July 27, 2010, the British Columbia Securities Commission released reasons of the majority of the panel supporting its April 27, 2010, decision to ceasetrade the Lions Gate shareholder rights plan. In its reasons the BCSC held that:

• A shareholder rights plan will only be tolerated where the plan provides a target board of directors with additional time to seek an improved or alternative transaction. Otherwise, there is no basis for allowing a shareholder rights plan to continue.
• It is in the public interest that each shareholder of a target company ultimately be given the opportunity to decide whether or not to accept or reject a bid, notwithstanding the conclusions of a target company's board of directors, or the views of a majority of the target company's shareholders. In other words, the BCSC is of the view that a plan may not be used as a "just say no" defence