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CCCA_V7No2_Q&AHowardLevine-FIN_CCCA 13-05-16 3:22 PM Page 18 Feature “ Quebec’s position is that we actually need to broaden the examination; not look only at poison pills but defensive meas- ” ures in general. CCCA So what’s the issue? HL Essentially a poison pill is a mechanism by which a target company can prevent an acquirer from buying up the shares because it triggers a dilution event that essentially dilutes the share- holdings or the outstanding shares of the compa- ny and renders the acquisition by the unwanted bidder prohibitively expensive. So it’s really a threat against the acquirer buying shares when the target company isn’t ready or prepared to have that occur. And, typically, the debate has been around how long that pill stays in place. The wisdom around poison pills was that they remain in place in order to permit a full auction process to occur so that ultimately, the company — the target com- pany — is sold at the best price to the most appropriate buyer. But there’s been conflicting case law from the various securities commissions that have caused a bit of a confusion: is it really ‘when must the pill go?’, or are there cases where the pill can actually 18 CCCA Canadian Corporate Counsel Association SUMMER 2013