Anti-Takeover Proposal in Quebec Could Prompt National Trend: Supporter
Marowits, Ross, The Canadian Press
Could Quebec create trend with anti-takeover idea?
MONTREAL - Quebec could become the first province to arm companies with a veto power over foreign takeovers, under a proposal with potential domino-effect implications for other parts of the country.
Two political parties have now promised that if they win the Sept. 4 election they would allow a company's board of directors to repel a foreign acquisition if it's deemed to be against the interest of workers or the greater community.
The latest such pledge from the Charest Liberals, whose promise Monday resembles an earlier one from the Parti Quebecois, prompted one analyst to predict copycat moves elsewhere in Canada.
The PQ, which leads in the polls, last week promised to amend the Quebec Corporation Act to also give corporate boards broader powers.
At a news conference Monday, Premier Jean Charest and Finance Minister Raymond Bachand said such rules would simply follow the lead of dozens of U.S. states with similar takeover restrictions.
The governing party also said that if it's re-elected it would create a $1 billion fund to help Quebec companies buy properties outside the province, with a special focus on the mining sector and in emerging powerhouses like Brazil, Russia, India and China.
All three major parties in the province have proposed, to varying degrees, policies to thwart foreign takeovers in Quebec -- a timely subject here given the attempted acquisition of the Rona hardware chain (TSX:RON) by the U.S. giant Lowe's.
The anti-takeover proposal would make it a little harder for such acquisitions to proceed in Quebec, said Michel Nadeau, executive director of the Institute for Governance of Private and Public Organizations. He said it would likely prompt other provinces to amend their own laws.
The Supreme Court of Canada ruled a few years ago in Bell Canada's fight with its bondholders that boards should consider the interests of all stakeholders, not just shareholders, he noted.
"Unfortunately, the provinces have not changed their legislation. Quebec will do it the first if the Liberals or the PQ are elected, but I'm sure that Ontario and other provinces will do the same as 27 U.S. states," he said in an interview. …