OSC And Court Decisions Clarify Joint Actor Rule

The recent decision of the Ontario Securities Commission in Sterling Centrecorp Inc. is the first Commission decision to deal in detail with support agreements, lockup agreements and the "joint actor" rule under Ontario securities law. The decision concludes that an irrevocable lockup or support agreement alone cannot raise a presumption that a shareholder is a joint actor with a bidder, regardless of how tightly constrained the shareholder’s ability may be under the agreement to act independently of the bidder.

In a parallel court proceeding, the Ontario Superior Court of Justice allowed a target’s directors considerable latitude regarding the process to follow in a going-private transaction involving insiders. This latitude is noteworthy compared with the more restrictive approach taken by the Delaware courts.