Asset Sale Transactions - Shareholder Approval Requirements

March 31, 2016 | Jennifer L. Asquin, Brent W. Kraus and William S. Osler

Canadian corporate statutes require approval by a special majority of shareholders (two-thirds) of the "sale, lease or exchange of all or substantially all of the property of a corporation other than in the ordinary course of business." In the current economic climate, where many corporations are selling assets in order to access capital, it is increasingly important that parties to an asset sale transaction carefully consider whether the transaction will trigger the shareholder approval threshold.

The determination of whether an asset sale constitutes "all or substantially all" of a corporation's property is considered by the courts from both a quantitative and a qualitative perspective. Notably, courts are placing increasing emphasis on the qualitative analysis, and will consider whether the transaction "transforms the fundamental nature of the corporation," even if the overall quantity of assets being sold is less than 50% of the corporation's property. For more information, please see our Client Update, "Considering an Asset Sale Transaction? Be Aware of Shareholder Approval Requirements," which explores the quantitative and qualitative analyses in detail and outlines the potential consequences of failing to obtain requisite shareholder approval.

Kraus Brent

Brent W. Kraus
Partner, Co-Head of Capital Markets and M&A
Capital Markets, Corporate Governance and M&A Lawyer at Bennett Jones Calgary

Brent Kraus focuses on public and private mergers and acquisitions and capital market transactions, as well as corporate governance and shareholder activism. Brent acts for: [...]

Osler William High Resolution Image

William S. Osler
Capital Markets, Securities, M&A and Corporate Governance Lawyer at Bennett Jones Calgary

Will Osler practices in the areas of public and private mergers and acquisitions, securities law, and corporate governance matters, with a particular focus on the oil and gas sector. Will has significant experience in domestic and cross-border joint bidding and co-ownership structures, including partnerships and joint ventures. His corporate governance advisory work includes advising corporations and boards of directors with respect to general compliance matters as well as specific issues arising out of transactions. Will works frequently on offerings of equity and debt securities, acting for [...]