OSC Reinforces Board Governance Imperatives

The role of the Board and Board conduct in relation to change of control and other strategic transactions is a key focus of regulators and investors and has been the subject of much recent comment, including in the recently released decision of the Ontario Securities Commission (OSC) concerning the HBC going private transaction. 

In the context of such transactions, enhanced disclosure requirements apply and both regulators and investors, including activists, will review the disclosure critically, zeroing in on those aspects of the Board’s process and decision-making that are most sensitive. As the HBC experience illustrates, if a transaction is contested by stakeholders, that scrutiny can be particularly intense and involve second-guessing from hindsight. Boards should therefore conduct themselves with a view to ensuring their decision-making can withstand such scrutiny, protecting against legal and reputational risk.