Lawyers speak about anti-takeover promises in Quebec

A Rona store is pictured in Ottawa in this February 24, 2011, file photo. REUTERS/Chris Wattie/Files

According to a poll in La Presse on Thursday, August 16, support for the Parti Quebecois (PQ) in the upcoming election is at 34 per cent, up two per cent over last week, enough to win a minority government. The incumbent Liberals – along with the PQ and the Coalition Avenir Québec (CAQ) – have promised to give directors in Quebec more authority to reject hostile takeovers from foreign companies, should they form the next ruling party. Meanwhile, the debate continues around Quebec’s embrace of so-called economic nationalism, in light of the Liberal vow to block any formal takeover attempt by Lowe’s for homegrown company Rona.

The securities Bar weighed in around the logistics of making these election promises a reality, with Lexpert-ranked lawyer Ralph Shay of Fraser Milner Casgrain LLP, saying that it would be challenging for Quebec to try to implement the changes through provincial securities law:

The mechanics would be tricky if they tried to do it through securities law because other provinces have jurisdiction over Quebec companies,” he told the Financial Post on Tuesday, noting that, “The provinces generally take the position that shareholders have the right to make the choice and the directors shouldn’t interfere with that.”

Fred Enns of Borden Ladner Gervais LLP in Montreal, also commenting in the Post, thinks the most likely route of change is an amending of Quebec’s Business Corporations Act, widening the scope of a board’s “fiduciary duty.”

What Charest, I think, is proposing would be a broader corporate amendment that would, in statute, do what the constituency statutes have done in the United Sates and that definitely would go farther than we go now, he said.

As for the future of the Lowe’s bid for Rona, at least one member of the competition Bar believes the Federal government will be paying attention to Quebec’s reaction:

It strikes me on first blush as really bad planning on the part of Lowe’s. If there is one thing we’ve learned, it is never try and get Investment Canada approval during an election. They couldn’t have planned this worse, the unnamed competition expert told Reuters.

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