Legal-Framework And Mechanics Of Going Private Transactions In Canada

Recently, many China-based issuers listed on Canadian stock exchanges (a "Canadian Exchange") have sought to complete a going private transaction ("GPT^").¹ A GPT is a transaction, or series of transactions, which has the intended result of transforming a public company into a private company. At the end of a GPT, the company will no longer be listed on a Canadian Exchange or be a reporting issuer in Canada.

This bulletin discusses three primary types of GPTs, including plans of arrangement, take-over bids, and amalgamations. We note that in Canada, most friendly GPTs are completed by way of a plan of arrangement. However, if the acquiror is confident that shareholders of the acquiree holding greater than 90% of the outstanding shares (excluding those shares held by the acquiror and co-operating acquirors) will tender to the bid, then a takeover bid, coupled with a compulsory squeeze out, will be the most efficient process. The squeeze-out amalgamation, on the other