Found it – “majority of minority”, 61-101Alright, I think I’ve seen enough to convince myself that the greater than 50% (majority of minority) requirement still exists with the new OSC Instruments (specific to Ontario of course), relating to the “plan of arrangement” voting process. Officially, it is found in MI 61-101 (#1 below).
To recap based strictly on my interpretations:
*”Take-over bid” (which is the process Severstal stated is their current intention) will require 90% of total minority shares (not just votes that get casted) – shares not voted will count as “NO” to Severstal’s offer
*With failure to pick up the required 90% votes through the “take-over bid” process, it is my understanding that Severstal will eventually need to launch a “plan of arrangement” process (via the court system), if they choose to move forward with their take over efforts. To succeed, Severstal will need to get 66 2/3 of total votes casted AND they will need to get the majority of the minority votes. They cannot succeed with only the 66 2/3. If minority shareholders hold strong to their shares then Severstal cannot win without the majority of minority shares. It wouldn’t matter how much of the HRG debt they convert over to Severstal controlled shares. They still need to get greater than 50% of the minority votes casted. However, they will be able to vote the minority shares they pick up in the “take-over bid” process as their own votes in the “plan of arrangement” minority voting process (once we get there). As such, it is crucial that minority investors DO NOT tender their shares to Severstal in the “take-over bid” process, as it will have a carry over effect on future voting initiatives.
1) This is directly from MULTILATERAL INSTRUMENT 61-101 - PROTECTION OF MINORITY SECURITY HOLDERS IN SPECIAL TRANSACTIONS
"minority approval" means, for a business combination or related party transaction of an issuer, approval of the proposed transaction by a majority of the votes as specified in Part 8, cast by holders of each class of affected securities at a meeting of security holders of that class called to consider the transaction;”
https://www.osc.gov.on.ca/Regulation/Rulemaking/Current/Part6/rule_20080201_61-101_protect-minority.jsp
2) Here is a document directly from the OSC (May 12, 2009) with a case ruling in which the OSC specifically used the 66 2/3 and “majority of minority” (greater than 50%) requirement - still posted on the OSC website:
“6. On February 19, 2009, the shareholders of the Filer, present or represented by proxy, at the Meeting, voted in favour of the proposed Arrangement, in a majority exceeding the required minimum approval by 66 2/3% of the holders of common shares and Series I preferred shares voting together and by the majority of the "minority shareholders". Over 98% of the holders of common shares and Series I preferred shares voting together and 95% of the "minority shareholders", voting separately as a class, approved the Arrangement.”
https://www.osc.gov.on.ca/Regulation/Orders/2009/ord_20090522_212_tangarine.jsp
3) This is from an M&A document, with the writers (the law firm Davies Ward Phillips & Vineberg) attempting to describe components of Multilateral Instrument 61-101 (page 18):
“Minority Approval”
“Minority approval by a ‘majority of the minority’ in all cases”
https://74.125.95.132/search?q=cache:YAfz2FMH_UsJ:www.dwpv.com/images/Canadian_Mergers_and_Acquisitions_-_2009_3rd_Edition_Revised.pdf+arrangement+66+2/3+majority+of+minority+instrument+2009&cd=10&hl=en&ct=clnk&gl=ca