High River Gold Mines Ltd HRIVF

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If a takeover bid is an insider bid, there must be a special committee of the board of directors established for the target. The special committee chooses the valuator and supervises the preparation of the valuation, and the bidder pays for the valuation. There are potentially tense moments if the bid is hostile.  The securities regulators are often asked to intervene in that situation. 

A business combination is a normal merger/acquisition type of transaction, where shareholders vote on the merger. MI 61-101 only covers transactions where a related party is involved. The obvious example would be a management buy-out, or a major shareholder buying out the other shareholders. But the rule could also come into play if a related party is obtaining a significant benefit from the transaction that is unavailable to the other shareholders. The board of directors or a special committee of the target must choose a valuator and supervise the preparation of the valuation for a business combination. 

A related party transaction under MI 61-101 is essentially a significant transaction between a company and a related party to the company, such as an insider. If a related party transaction is also a business combination, the requirements for a business combination apply rather than the related party transaction requirements. 

Note: The party of Baker Steel who pledged to sell their 15.9 million HRG Shares owns 50% of PROGNOZ, which is in effect combining the shares, and thus is a RELATED PARTY.

 

Furthermore, Baker Steel reports a different and much higher grade/resource 43-101 for Prognoz than High River Gold has disclosed to High River Shareholders.