Sharon Geraghty weighs in on securities regulation debate for Lexpert

Blurred Boundaries

May 08, 2014

Securities regulators establish rules of engagement for business with the intention of, among other things, protecting investors and shareholders. How these rules affect the corporate ecosystem of boards, shareholders, issuers, activists and other players is a continuous topic of discussion—one for which Lexpert has sought partner Sharon Geraghty’s comment. Below is an excerpt of the article.

When Sharon Geraghty, a partner at Torys LLP in Toronto, is working on a public-company deal that may have issues, one of the first things she does is to bring in one of her firm’s litigators.

“Absolutely. If you’re in a situation, and this happens so much in M&A, where we think someone might challenge what we’re doing, we will definitely sit down and look at what we think is the best place for our client to be—where we will get the right result—and try to figure out how to get it there.”

Geraghty explains, “Securities regulators sharply put their stake in the ground in favour of shareholder primacy, which the institutional investors very much favour and like. The issuers, on the other hand, have very good arguments that shareholder primacy is not the right thing. They focus on corporate law. They point to BCE and say quite rightly that the courts take a more deferential approach to boards. So their view is that corporate governance has really improved, so you should be trusting the board. They want securities regulators to get out of this space and leave it to the courts.”

Whichever way it falls out, she says, the outcome of this tug-of-war will have “a huge impact” on Canada’s capital markets.

To read the full article, click here.


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