Private Equity

Private equity funds are active participants in merger and acquisition transactions in Canada. Set forth below is a brief discussion on some legal topics that are particular to private equity funds.

See Chinese version below.

A private equity fund that proposes to distribute its securities to persons located in Canada must either qualify the distribution pursuant to a prospectus prepared and filed in accordance with applicable Canadian securities regulatory requirements or it must conduct the distribution in reliance upon a prospectus exemption, such as the private-issuer exemption. The private-issuer exemption is available for a distribution of securities by a private issuer to a prescribed class of persons who purchase the securities as principal. By relying on this exemption, a private issuer can raise any amount of capital through any number of financings with no prospectus requirement.

When forming a private equity fund in Canada, consideration should be given to the application of dealer registration, adviser registration and investment fund manager registration requirements to the establishment and operation of the fund. A person is required to register as a dealer under Canadian securities laws if it engages in, or holds itself out as engaging in, the business of trading securities. A person is required to register as an adviser if it engages in, or holds itself out as engaging in, the business of advising others as to the investing in, or the buying or selling of, securities. A person is required to register as an investment fund manager if it acts as the manager of an investment fund. Depending on the activities to be undertaken by a private equity fund, it can be structured in such a manner so that it is exempt from dealer registration, adviser registration and investment fund manager registration requirements.

Private equity investments in Canada are similar to traditional mergers and acquisitions. When acquiring public companies, the legal analysis with respect to take-over bids, plans of arrangement and mergers/amalgamations is applicable. As most investments by private equity investors are leveraged with debt, special consideration should be paid to the financing of the acquisition (particularly reducing or removing financing conditions that are incremental to the conditions in the principal purchase agreement).

Private equity funds may acquire majority or minority interests and therefore shareholder agreements (or similar operating agreements, such as partnership agreements) become increasingly important for governance, control, capital contributions, distributions and liquidity rights or restrictions (such as tag-along rights, drag-along rights, rights of first refusal, rights of first offer and ownership restrictions).

As private equity investments are made for a set time frame, tax structuring is very important to ensure an efficient structure is utilized, particularly for cross-border investments by U.S. private equity funds. Similar to the U.S., there are many exit strategies that can be utilized by private equity funds in Canada. Typical exit strategies exercised in Canada are a sale to:

(i) the current management through a management buyout;

(ii) other shareholders through share/unit transfer rights set out in the shareholder/partnership agreement;

(iii) a third party through either a private sale or a controlled auction; or

(iv) the public through an IPO.


私募股权投资

私募股权投资基金是加拿大并购交易积极的参与者。 以下简要讨论私募股权投资特有的若干一些法律问题。

如一个私募股权投资基金计划对加拿大境内人士分销证券,此基金必须提供一份符合加拿大证券监管局要求的招股说明书,或者按特定的招股说明书豁免条款进行分销,比如有关“私营发行人”的豁免条款。此项豁免指的是私营发行人(即非上市公司)将证券分销给特定类别的人士,并且这些人士为自己购买证券。依据此豁免条款, 私营发行人可以无限次数地融资,并筹集任何资金数额,而且不需要提供招股说明书。

在加拿大成立私募股权投资基金时, 需要充分考虑那些为建立和基金运作的证券交易商,投资顾问和投资基金经理登记的规定。依照加拿大证券法,凡是从事证券买卖交易的人士则须登记为证券交易商 (dealer); 凡是从事向他人提供投资顾问的人士,则须登记为投资顾问 (adviser);凡是从事投资基金管理的人士, 则须登记为投资基金经理 (investment fund manager)。不过根据私募股权投资基金所开展的项目, 可以通过一些策划使其免受证券交易商,投资顾问、和投资基金经理的登记要求。

加拿大的私募股权投资与传统的并购相似,于是在收购上市公司时, 私募股权投资可以适当采用有关要约收购、安排计划和合并收购的法律分析。此外,由于大多数私募股权投资者利用债务融资(债务杠杆),则应谨慎考虑融资协议的先决条件(尤其要减少或取消买卖合同没有的先决条件)。

私募股权投资可以获得多数或少数股权,因此股东协议(或类似的管理协议,比如合伙协议)对于治理、控制、出资、分配以及流动资金的权利和限制 (如随售权,拖售权,优先认股权和所有权限制) 变得越来越重要。

另外,私募股权投资是在限定的时间内进行, 因而为了确保最有效的收益, 税务规划非常关键,特别是对于美国私募股权的跨国投资。最后,类似美国, 加拿大私募股权投资也有许多退出战略。在加拿大, 典型的私募股权退出的方式包括:

  • 当前管理层收购公司的股份;
  • 将股权转让给其他股东或合伙人;
  • 将股权通过私下交易或受控拍卖转让给第三方; 和
  • 首次公开募股方式。

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