Don’t "Put" Yourself At Risk

Canadian securities legislation provides that a take-over bid may be triggered when an offer to acquire outstanding voting or equity securities of a class of a public company is made to a person in a Canadian jurisdiction, where the securities subject to the offer, together with the offeror's own securities, constitute in the aggregate 20% or more of the outstanding securities of that class. The take-over bid rules may apply in the context of the grant of put and call options. It is therefore essential to structure the terms of these options to ensure the availability of take-over bid exemptions where necessary.

Private Agreement Exemption

The so-called private agreement exemption provides for a statutory exemption from the take-over bid rules subject to certain conditions, including when purchases are made from not more than five persons and the value of the consideration paid for the securities is not greater than 115% of the "market price" (as determined by