The Securities Commission has granted an exemption to a corporation (the Filer) from the requirement to obtain separate minority approval from holders of its common shares and proportionate voting shares for a proposed business combination transaction (the Arrangement). The Filer is a British Columbia corporation primarily engaged in the production and sale of cannabis and is a reporting issuer in all Canadian provinces and territories except Quebec.
The exemption is based on the rationale that the two classes of shares were intended to be identical except for their proportionate voting, dividend, and liquidation rights. There is no difference in interest between the holders of each class in connection with the Arrangement, and both classes are not affected differently by the transaction. The Filer’s constating documents and applicable corporate statute typically allow shareholders to vote as a single class except in certain circumstances, which are not present in this case.
The exemption is conditional upon several safeguards, including the establishment of an independent committee, obtaining fairness opinions, and approval by the Court. The Filer must also hold a special meeting where disinterested shareholders, excluding certain related parties, vote as a single class. The fairness opinions must be included in full in the information circular provided to shareholders.
The exemption is granted under section 9.1 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, which is designed to ensure fair treatment of all security holders in transactions like business combinations. The decision was made by the Ontario Securities Commission, which serves as the principal regulator for this application, and the exemption applies across multiple Canadian jurisdictions.