It took the Ontario Securities Commission (OSC) only three days after a June 27, 2006, hearing to issue its order extending Falconbridge Ltd.''s poison pill plan.
The order represented a critical juncture in the initial stages of what has become a gigantic mining takeover play on the world stage - one that has focused the attention of international business on Ontario's capital markets and their regulatory framework.
Reasons for its order would follow, the OSC panel promised. And they did, but not until August 17, when 19 pages of reasons issued almost two months after the order, long after lawyers had to make critical decisions that affected not only the competing bids for Falconbridge but the subsequent global battle for control of Inco.
"The delay is inexplicable," says one lawyer close to the takeover battle. "The reasons would have provided important guidance in making some of the difficult decisions that had to be made in July and August."
Other observers were even harsher.
"The delay in giving reasons reflects a lack of real professionalism on the part of the OSC and highlights what is a significant problem at the tribunal," said another lawyer who worked on the case.
"The panel had oodles of time to get the reasons out before the pill expired and should have done so in this highly contested takeover battle."
Laurie Gillet, a spokesperson for the OSC, was unperturbed when advised of the criticisms.
"The timing of the issuance of reasons related to Commission orders is comparable to similar adjudicative panels such as the courts," she told Law Times.
Indeed, some lawyers are effusive in their praise of the OSC's governance of the Falconbridge and Inco takeovers.
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"The OSC is working with these cases in real time," says Toronto securities lawyer Joe Groia. "The fact that they made a decision so quickly in Re Falconbridge is what really counts. As for the reasons, whether they issued in two weeks or two months didn't matter because their real value is as a precedent for future hearings."
Garth Girvan of McCarthy Tétrault LLP is of similar mind.
"The order is what drove the process, and the decision itself was no surprise," he said. "It's true that the reasons could have issued much earlier, but they wouldn't have made a difference.
"Once the order issued, everybody operated in accordance with it and the Falconbridge deal got done."
Still, critics of the delay say it points to a lack of depth at the OSC.
Paul Moore, an OSC vice-chair, is widely acknowledged as the commissioner who is most knowledgeable about poison pills. Normally, Moore would have expected that he would be one of the panelists on such a high-profile case. But he couldn't sit because he had a conflict of interest.
The lawyer who replaced Moore was Wendell Wigle, whose background is in insurance law and who is relatively inexperienced in securities matters - so much so that it is believed that Re Falconbridge was his first case as an OSC commissioner, and certainly his first high-profile case.
The other two members of the panel, while highly regarded, were not lawyers.
"How do you get a personal injury lawyer who's never been on a case before, an accountant and some other guy on a poison pill hearing?" asked one lawyer who appears regularly before the commission.
"The problem with a panel like that. . . is that the view of commission staff becomes disproportionately weighty."
Indeed, the view of commission staff did carry the day in the result, which is significant given the OSC's historic distaste for long-lasting poison pills.
Many observers saw Re Falconbridge, which extended a pill that had been outstanding for 280 days for an additional month in defence of Swiss mining giant Xstrata's bid for the company, as an indication that the OSC would in the future show more deference to the business judgment of boards of directors - moving Canada's most important securities regulator closer to the American position.
However, the commission was careful to frame its decision in the language of "unique circumstances."
In particular, the panel pointed to the interest in Falconbridge first expressed just two days before the hearing by Phelps Dodge, a major international player in the mining industry, as evidence that there were "other potential, viable offerors out there."
As well, the fact that Falconbridge's market price was higher than prices for Xstrata and Inco suggested that the auction was not over.
