Com Law 11

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What is a fundamental transaction?
Transaction that will fundamentally alter a company
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Examples of fundamental transactions?
1. Disposing of a greater part of the company's assets 2. Entering into a scheme of arrangement 3. Entering into an almagamation/merger
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What constitutes 'greater part of assets'?
More than 50% of gross assets measured at FV OR assets responsible for the generation of more than 50% of the company's profits
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Requirements for disposal of greater part of assets?
Special resolution
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Can the special resolution be drafted to cover a category of disposals?
No - only specific transactions
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Can you vote on the resolution if you are the one acquiring the assets?
No - Voting rights held by an acquiring party must be discounted from the quorum and vote
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What must disposals be given at?
Fair market value
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What is an amalgamation or merger?
The assets and liabilities of one company are joined with those of another
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What does the written amalgamation/merger agreement include?
MOI of any new company + proposed directors + the extent to which shares are to be converted + est. cost of transaction + what will happen to sh's of the merging companies that won't survive + details of subsequent management of merged company
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What does the shareholder approval process include?
1. Directors submit proposed transaction to sh's 2. If directors believe each proposed merged entity will satisfy s+l test a sh meeting called 3. Quorum of 25% of voting rights req and 75% of quorum must approve
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What are the steps taken for the implementation of the merger/amalgamation?
Notify all known creditors of merging companies (creditors have 15 days to object to it) + file a notice of merger with the Commission which confirms req approvals and includes the MOI
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What is a scheme of arrangement?
any agreement proposed by the board of directors and entered into between the company and shareholders
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When can the BoD not initiate a scheme of arrangement?
If the company is in BR or liquidation proceedings
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What type of arrangements does an SoA include?
The consolidation of secs of different classes + the division of secs into different classes + an expropriation of secs from holders + a reaquisition by the company of its secs
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What are the regulations for a scheme of arrangement?
Company must employ qualified, independent expert to prepare a report about the arrangement – report must be distributed to all holders of securities and must identify which holders are affected and describe material facts
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What requirements are applicable to all fundamental transactions?
Notice requirements, special resolution + sometimes court approval
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What are the notice requirements?
Must contain prescibed info detailing nature of transaction + must alert sh's of right to approach the court if they dissent + must alert sh's of their appraisal rights if they dissent
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What are the requirements for the special resolution?
Quorum consists of at least 25% of voting rights entitled to be exercised on the matter (voting rights of a person aquiring the assets don't count)
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When will court approval be required?
Holders of at least 15% of voting rights oppose the resolution OR single shareholder approaches the court and meets requirements
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What does the Takeover Regulation Panel do?
Oversees 'affected transactions' involving 'regulated companies'
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What is an affected transaction?
The fundamental transactions discussed above
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What is a regulated company?
A public company, a state owned company, and a private company under certain circumstances
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Under what circumstances is a private company a regulated company?
The % of the company's issued securities that have been transferred within 2 years of the affected transaction is greater than 10% OR company's MOI provides that the company and its securities are to be overseen by the panel
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Other cards in this set

Card 2

Front

Examples of fundamental transactions?

Back

1. Disposing of a greater part of the company's assets 2. Entering into a scheme of arrangement 3. Entering into an almagamation/merger

Card 3

Front

What constitutes 'greater part of assets'?

Back

Preview of the front of card 3

Card 4

Front

Requirements for disposal of greater part of assets?

Back

Preview of the front of card 4

Card 5

Front

Can the special resolution be drafted to cover a category of disposals?

Back

Preview of the front of card 5
View more cards

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