Conflict of interest transactions

Conflict of interest protections are designed to mitigate risks to minority security holders when a related party of the issuer—who may have superior access to information or significant influence (by virtue of voting power or board representation)—is involved in a conflict of interest transaction with the issuer.

Protections for minority security holders

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101) regulates conflict of interest transactions including:  

  • insider bids
  • issuer bids
  • business combinations
  • related party transactions

The objective of MI 61-101 is to ensure that all security holders of issuers involved in conflict of interest transactions are treated in a manner that is fair, and that is perceived to be fair. This is achieved through procedural protections, including:

  • enhanced disclosure, including disclosure of prior valuations in respect of, and prior offers for, the target
  • independent valuations
  • minority shareholder approval
  • independent committee review (which is recommended for all transactions regulated by MI 61-101, but only specifically mandated for insider bids)

MI 61-101 provides exemptions from the independent valuation and minority shareholder approval requirements in certain circumstances.