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Consultation Pertaining to Defensive Tactics in response toTake-Over-Bids - AMF Proposes Alternative Approach to Regulation of DefensiveTactics

Thursday, March 14, 2013

Montréal – The Autorité des marchés financiers (the "AMF") is launching a consultation on intervention by Canadian securities regulators in respect of defensive tactics adopted in response to unsolicited take-over bids.

This consultation is taking place concurrently and in conjunction with a proposal published by the Canadian Securities Administrators (the "CSA") in respect of National Instrument 62-105 Security Holder Rights Plans (in Québec, the Regulation 62-105 respecting Security Holder Rights Plans). The purpose of the AMF consultation is to present an alternative approach to that contemplated by the CSA proposal and thereby initiate broader reflection on the Canadian take-over bid regime and defensive tactics.

Within the framework of its consultation, the AMF proposes to replace Notice 62-202 relating to Take-Over Bids – Defensive Tactics with a new policy that would clearly recognize the fiduciary duty of directors to the corporation in responding to an unsolicited take-over bid and would redefine regulators' intervention on the ground of public interest. Under the AMF proposal, such intervention would be restrained to situations where boards' actions or decisions are clearly abusive of security holders’ rights or negatively impact the efficiency of capital markets.

"The primary objective of our proposal is to restore the regulatory balance between bidders and the boards of target corporations and update the current regime to reflect the current legal and economic environment as well as market practices respecting unsolicited take-over bids. The context has changed significantly over the past 25 years, and we believe that the time has come to take action," stated Louis Morisset, AMF Superintendent, Securities Markets.

The purpose of the consultation is to provide a forum for discussion on the issues concerning the regulation of defensive tactics in Canada, including the role of boards of directors facing an unsolicited take-over bid, and gather comments on the AMF proposal. “This consultation will serve as an important step toward implementing the most appropriate approach in the present context to effectively regulating defensive tactics and, more generally, the Canadian take-over bid regime,” added Mr. Morisset.

The Autorité des marchés financiers (the "AMF") is the regulatory and oversight body for Québec’s financial sector.

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