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ARTICLE · 18 JANUARY 2011

OSC Rejects Deference to Target Boards in Poison Pill Decisions

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The Ontario Securities Commission’s reasons in "Baffinland Iron Mines Corporation" clearly rejected the proposition that securities commissions should defer to the business judgment of a target board of directors in deciding whether to cease trade a shareholder rights plan (also known as a poison pill).

CanadaCorporate/Commercial Law
Jeffery Barnes
Jeffery Barnes
Melanie Bradley
Melanie Bradley
David Surat
David Surat
Michael Waters
Michael Waters
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The Ontario Securities Commission's reasons in Baffinland Iron Mines Corporation clearly rejected the proposition that securities commissions should defer to the business judgment of a target board of directors in deciding whether to cease trade a shareholder rights plan (also known as a poison pill). This decision should clarify some of the confusion arising from the OSC's earlier decision in Neo Material Technologies Inc. and the British Columbia Securities Commission's decision in Lions Gate Entertainment Corp.

The Baffinland Contest

Nunavut Iron Ore Acquistion Inc. made an unsolicited offer to acquire the shares of Baffinland on September 22, 2010, which resulted in a contest for control of Baffinland. On November 8, 2010, Baffinland entered into a support agreement in connection with a competing offer from ArcelorMittal S.A. The ArcelorMittal offer also had the support of Baffinland shareholders holding approximately 26% of the outstanding shares. Both offers

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