Shareholder's rights plans - the poison pill in the U.S. and Canada: background and legal considerations

Abstract

Background and Legal Considerations 4. The term «take-over bid» is used interchangeably throughout the present text with its American equivalent, «tender offer». The term «take-over bid» is defined in the Québec Securities Act, R.S.Q., c. V-1.1, as amended, at s. 110 as an offer to purchase for cash voting or equity securities of a company whereby the person proposing the bid would obtain or increase his interest of 20% or more of the outstanding securities of that class of securities at the date of the offer to purchase. The term "tender offer" is not defined by American federal legislation and as a result, U.S. Courts have formulated their own definition. See for example S.E.C. v. Carter Hawley Hale Stores, Inc., 760 F. 2d 945 (1985) where the court found that the existence of a tender offer is determined by the following factors: (1) active and widespread solicitation of public shareholders for shares of an issuer; (2) solicitation made for a substantial percentage of the issuer's stock; (3) offer to purchase made at a premium over the prevailing market price; (4) terms of the offer are firm rather than negotiable; (5) offer contingent on the tender of a fixed maximum number of shares to be purchased; (6) offer open only for a limited period of time; (7) offeree subjected to selling pressure; and (8) public announcements of a purchasing program concerning the target company precede or accompany rapid accumulation of a large amount of a target's securities. 5. For general comments on various defensive measures see L. Serafini, «Survol des tactiques défensives» in