Monday, April 11, 2011

Dissent mechanism, and the share certificate

I regret having made an error in that post that was quoted in the comments here. I later corrected myself, but it's better to just post the relevant subsections of S. 190 of the Canada Business Corporations Act, and then give them a quick summary.

190. Right to Dissent


(5) A dissenting shareholder shall send to the corporation, at or before any meeting of shareholders at which a resolution referred to in subsection (1) or (2) is to be voted on, a written objection to the resolution, unless the corporation did not give notice to the shareholder of the purpose of the meeting and of their right to dissent.

Notice of resolution

(6) The corporation shall, within ten days after the shareholders adopt the resolution, send to each shareholder who has filed the objection referred to in subsection (5) notice that the resolution has been adopted, but such notice is not required to be sent to any shareholder who voted for the resolution or who has withdrawn their objection.

Demand for payment

(7) A dissenting shareholder shall, within twenty days after receiving a notice under subsection (6) or, if the shareholder does not receive such notice, within twenty days after learning that the resolution has been adopted, send to the corporation a written notice containing

(a) the shareholder’s name and address;

(b) the number and class of shares in respect of which the shareholder dissents; and

(c) a demand for payment of the fair value of such shares.

Share certificate

(8) A dissenting shareholder shall, within thirty days after sending a notice under subsection (7), send the certificates representing the shares in respect of which the shareholder dissents to the corporation or its transfer agent.

So, the first thing to do, filing a notice of dissent, is simple. You use plain language to declare that you object to the resolution (the merger resolution, in this case), and that you wish to dissent. If the resolution passes, you have 20 days to send in a written notice demanding a payment of fair value for your shares. Within 30 days after that, you have to send in your share certificate(s). So, you have up to 50 days after the resolution passes to obtain the share certificate(s) and to complete the submission. (I say "up to 50 days", because each of the clocks ticks off separately. If you file your demand for fair value after only 5 days, the 30 day clock to submit the share certificate starts right then.) All submissions should be by registered mail, as you may need to verify receipt of the submissions. You should also make sure your brokerage is aware of your intention, so that they can freeze your shares until you decide whether to follow through.

During that 50 day period, you can change your mind, and decide to accept the company's offer. (This actually happens quite frequently.)

Shares held in tax sheltered accounts cannot be filed in dissent, as you cannot obtain the share certificates without withdrawing the shares from the sheltered account. The tax-sheltering structure is a trust entity that makes you the indirect owner of the shares. It may or may not be worthwhile to pull shares out of a TFSA, but I sincerely doubt that it would make sense to pull them out of an RRSP/RESP, unless you can replace them with cash at the then current market price.



Wopster said...

Hello Lar,

Thanks for the clarification on dissenting shares.

I will wait on the committee's direction as we should all pursue the same route to strengthen our positions against the merger.


nt300 said...

This clears things up Lar, thank you very much.

I too plan on waiting on the CMM committee's direction...Though I believe voting NO may be the best course of action IMHO. There’s many that are voting NO to this merger but have not signed the “Anti-Merger Registration” on stockigloo...

maria said...

Thanks Lar. I really appreciate the clarification. Of course I too will be waiting for direction from the committee.

Cocoablini said...

We confirm receipt of your e-mail dated March 29, 2011 that was addressed to CSA Secretariat and forwarded to TSX Venture Exchange (the "Exchange") regarding your concerns with respect to Century Mining Corporation, ( the "Company").

The Compliance and Disclosure Department of the Exchange has reviewed and considered the issues you have brought forward to determine if there has been a breach of Exchange Requirements. . Due to the nature of the issues you have identified, we have forwarded your email to Listed Issuer Services Department of the Exchange for review and response.

Due to our strict confidentiality guidelines we are not at liberty to disclose any information regarding any review or investigation that we undertake. As a result, you will likely hear nothing further from us on this matter. We will correspond directly with the Company should we decide to proceed with a formal review of this matter.

Thank you for bringing this to our attention.

Gilmourr said...

Hey everyone,

I think this was mentioned sometime in the past but I couldn't find the post. Anyone have some good examples of dissident shareholder action and how close their shares were to fair value?

Just looking to see the worst (conservative) side of things and the good case scenarios as well.

Thanks in advance!

Jonathan said...

When it comes time to DECENT, HOW do I do this? Is there a post that outlines this? I have about 100,000 voting shares that I don't want to lose the opportunity to dissent.

Hope someone in the know reads this...

maria said...

Jonathan, you commented on the post --"Dissent mechanism, and the share certificate". Lar spells out the exact process. Read it carefully.

Ryan K said...

So if you Dissent, do you loose your voting rights, or is that treated as a "NO" vote?