Fairness Opinion Flare-Up

It is generally considered advisable for a board or special committee of a public corporation involved in a significant M&A transaction, including a court-approved plan of arrangement, to seek a fairness opinion from its independent financial advisor. The text of the fairness opinion is normally provided to shareholders who will be asked to approve the transaction as one indicator of the board's diligence and good faith in considering and approving its terms and its fairness to shareholders from a financial point of view.

While Canadian courts have had, at times, a difficult relationship with fairness opinions, they generally have permitted the practice to remain consistent. A recent decision of the Yukon Supreme Court rekindles some uncertainty as to the role of fairness opinions in plans of arrangement relating to public corporations.