Trustees have to demand evidence of compliance (s.86-66) Trustees must give the debenture holders notice of a default by the corp (s.90) Trustees must act honestly and in good faith for the interests of debt holders and with the care, skill, and diligence of a reasonably prudent trustee (s.91) SECURITIES REGULATION If you are setting up any business: are you getting money from somewhere other than your own pocket? Yes then you have a securities law issue (even if you issue shares to – yourself) In Canada, securities regulation is a matter of provincial jurisdiction and is typically dealt with in separate securities statutes Most provincial securities acts provide that a prospectus is required when there is a of a “distribution” “security” = not just shares and debentures but also warrants, options, rights and other “security” instruments or transactions that have a similar investment character = includes, among other things, trade in a security of an issuer that has “Distribution” “a not been previously issued Distribution of securities to anyone (including yourself) exempted if only to – yourself Trade = broadly defined to include any sale of disposition of a security for valuable consideration You can be exempted form the Prospectus Requirement if you are a issuer” (small “private business) that has fewer than 50 shareholders and has only distributed securities in reliance on the private issuer exemptions. Provincial securities act disclosure requirements include annual info forms, financial disclosure, proxy circular disclosure, insider trading reports and timely disclosure Takeover Bid Regulation A takeover bid is a bid to acquire sufficient shares of a corp in to control the management (20% or more of the equity securities of any class of the issuer) Where an offeror makes a takeover bid the bid must comply with certain rules: must be made to all holders of the target shares of the class sought; bud must be kept open for a minimum of 35 days; shares tendered by offerees can be withdrawn within bid period; bidder must provide a takeover bid circular. Poison pill plan involve the issuance of rights to buy further shares of the issuer to – existing shareholders allows existing shareholders to acquire shares below market – price Rights only come into effect when a person acquires more than a specified amount (usually 20%)
Trustees have to demand evidence of compliance (s.86-66) Trustees must give the debenture holders notice of a default by the corp (s.90) Trustees must act honestly and in good faith for the interests of debt holders and with the care, skill, and diligence of a reasonably prudent trustee (s.91) SECURITIES REGULATION If you are setting up any business: are you getting money from somewhere other than your own pocket? Yes – then you have a securities law issue (even if you issue shares to yourself) In Canada, securities regulation is a matter of provincial jurisdiction and is typically dealt with in separate securities statutes Most provincial securities acts provide that a prospectus is required when there is a “distribution” of a “security” “security” = not just shares and debentures but also warrants, options, rights and other instruments or transactions that have a similar investment character “Distribution” = includes, among other things, “a trade in a security of an issuer that has not been previously issued Distribution of securities to anyone (including yourself) – exempted if only to yourself Trade = broadly defined to include any sale of disposition of a security for valuable consideration You can be exempted form the Prospectus Requirement if you are a “private issuer” (small business) that has fewer than 50 shareholders and has only distributed securities in reliance on the private issuer exemptions. Provincial securities act disclosure requirements include annual info forms, financial disclosure, proxy circular disclosure, insider trading reports and timely disclosure Takeover Bid Regulation A takeover bid is a bid to acquire sufficient shares of a corp in to control the management (20% or more of the equity securities of any class of the issuer) Where an offeror makes a takeover bid the bid must comply with certain rules: must be made to all holders of the target shares of the class sought; bud must be kept open for a minimum of 35 days; shares tendered by offerees can be withdrawn within bid period; bidder must provide a takeover bid circular. Poison pill plan – involve the issuance of rights to buy further shares of the issuer to existing shareholders – allows existing shareholders to acquire shares below market price Rights only come into effect when a person acquires more than a specified amount (usually 20%)
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