Friday News Finds – March 19, 2021

By Zach Lechner-Sung

Welcome back to Friday Finds! This week, we will be discussing Rogers’ proposed acquisition of Shaw Communications, a CSA review of disclosure regarding women in leadership positions, and a recent OSC decision concerning the minimum tender requirement for take-over bids.

On Monday, Rogers Communications Inc. announced that it will be acquiring Shaw Communications Inc. for $40.50 per share. The deal, valued at $26 billion, represents a pivotal moment for the wireless communications industry following years of frustration with Canadian internet services. While the Shaw family has stated that it “fully and irrevocably” supports the deal, regulatory approval is another question. If endorsed, the acquisition would reduce the number of major players in the wireless industry from four to three. With hopes of closing the deal in the first half of 2022, Rogers and Shaw have promised to “work cooperatively and constructively” with the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC), and the Minister of Innovation, Science and Economic Development. In light of the proposed transaction, regulators have once again communicated their goal of ensuring greater affordability, competition, and innovation, however The Competition Bureau and CRTC have often taken a weak stance towards consolidation, approving transactions such as Rogers’ acquisition of Fido in 2004, Shaw’s acquisition of Wind in 2016, and Bell’s acquisition of Manitoba Telecom Services in 2017. To ease public concern, Rogers and Shaw have made several promises to invest in critical infrastructure projects. In addition to promising a $2.5 billion investment in 5G network capacity in Western Canada, the two companies have pledged $1 billion towards bringing high-speed internet to rural and Indigenous communities. Rogers has also expressed plans to expand its Connected for Success program nationally to increase access to internet for seniors and low-income Canadians. While public concern is warranted, the deal may provide regulators with an opportunity to reshape the industry. Like in the U.S, regulators may decide to force large providers to allow smaller companies to use their towers and networks. The ability to buy wholesale access would increase consumer choice and reduce the cost of internet access significantly. Alternatively, regulators may decide to approve the deal with certain conditions, such as requiring a network wholesale agreement with a new fourth. The CBLB will keep you updated on this story over the coming months.

The Canadian Securities Administrators recently released CSA Multilateral Staff Notice 58-312, detailing the organization’s sixth review of disclosure regarding women on boards and in executive officer positions. The review was conducted by securities regulators in Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec, and Saskatchewan, using a sample of 610 Canadian issuers with year-ends between December 31, 2019 and March 31, 2020. Some key trends are highlighted below:

  • 20% of board seats are held by women (increase from 11% in 2015)
  • 79% of issuers reported having at least one woman on their board in 2020 (increase from 49% in 2015)
  • 6% of issuers reported having a female board chairperson
  • 30% of vacant board seats were filled by women in 2020
  • 65% of issuers reported having at least one woman in an executive officer position (5% CEO, 15% CFO)
  • 4% of issuers reported having set targets for the representation of women in executive officer positions
  • 26% of issuers reported having set targets for the representation of women on their board

The review follows a study released by Blakes, Cassels & Graydon LLP in 2020 which showed that 66% of general counsel (GC) board members were women. While there is strong female board representation among GCs, this number is in stark contrast to the overall representation of women on boards. Furthermore, male in-house legal experts are still 2.5x more likely to be promoted to “Chief Legal Officer”, and in 2020, Blakes reported that only 28% of CLOs were women. Although there is still significant room for improvement, both studies demonstrate positive trends in terms of the representation of women in leadership positions. Nevertheless, the areas that require the most improvement relate to the positions at the top of the corporate ladder – specifically the roles of chairperson, CEO, CFO, and CLO.

Last month, the OSC released its decision in In the Matter of Optiva Inc., refusing to grant an exemption from the minimum tender requirement to ESW Capital LLC (ESW). The case concerned ESW’s proposed bid for Optiva Inc., a telecommunications company, and represented the first case concerning the minimum tender requirement adopted in 2016. Under the minimum tender requirement, a take-over bid cannot go through unless more than 50% of outstanding securities (not including those owned by the bidder) tender. In its decision, the OSC reaffirmed that the purpose of the requirement is to foster shareholder choice when take-over bids are made, and an exemption will only be granted in “clear and exceptional circumstances”. The minimum tender rule seeks to empower shareholders by incentivizing bidders to improve their offers and allowing time for “collective action by security holders in response to a take-over bid”.  In Optiva, the OSC explained that the blocking of a bid by minority shareholders cannot be the sole reason for granting an exemption. In these cases, bidders should attempt to improve their offers rather than look to regulators for special treatment. Overall, the case signals the OSC’s strong desire to adhere closely to the prescribed purpose of the minimum tender requirement.

That wraps up this week’s Friday Finds! Thank you for reading and come back next week for more business law news stories.