Stuck at the Crossroads? The Regulation of Defence Strategies in Canadian M&A

The regulation of defence strategies deployed in Canadian mergers and acquisition (M&A) transactions was the subject of considerable analysis and discussion on the part of regulatory authorities and policy makers from 2013 to 2017. This article reviews developments during and after this five-year period. The article stresses that since adopting their policy on defensive tactics in 1986, Canadian securities commissions have been committed to a vision that seeks to maximize shareholder value in M&A transactions, rather than being focused more squarely on their statutory mandate to protect investors’ interests. The article contends that securities commissions are not well placed to resolve the tension between their vision and the one that underlies our corporate law’s provisions governing fiduciary duties. Moreover, the current impasse reveals that there is a deeper structural problem that is impeding reform: there is no satisfactory mechanism in Canada that allows for the principal institutional players that shape our business law framework to engage in constructive long term dialogue. Creative thinking is therefore needed about how best to establish a body or forum that can break the logjam, explore how the M&A context has evolved since the mid-1980s and move us toward much needed reform. The article considers what such a body or forum might look like, including whether it might be created other than by government, and sets out some guiding principles of relevance to its composition, its mandate and issues it needs to consider, the resources it would need and the manner in which it should come at formulating its advice. The article stresses that, most fundamentally, its mandate must include looking at Canadian corporate and securities law as an integrated whole, an approach that has for too long been noticeably absent from proposals for reform in the realm of Canadian M&A