Reverse Takeovers
Once the corporate changes are underway, the next step in the Reverse Takeover (RTO) process is preparing for the Special General Meeting (SGM). Both the Listed Issuer and Target Company must hold shareholder meetings to approve the transaction and other associated resolutions. This section breaks down the key steps for ensuring a smooth SGM, focusing on legal documentation, shareholder communications, and regulatory compliance.
Preparing for the Listed Issuer Special General Meeting
- Setting the Record and Meeting Dates
Legal counsel is responsible for coordinating with the transfer agent to set the record date (the date by which shareholders must own shares to vote) and the meeting date for the SGM. These dates are crucial for ensuring that shareholders have ample time to review the materials and participate in the meeting.
Action Items:
- Legal Counsel to set the record and meeting dates with the transfer agent.
- a) Record date
- b) Meeting date
- Preparing the Information Circular
The Information Circular is the primary document that outlines the key details of the RTO transaction and the resolutions to be voted on at the SGM. Legal counsel must draft the circular, which includes the notice of meeting and form of proxy. This document will provide shareholders with the information they need to make an informed decision.
Action Items:
- Legal Counsel to draft the Information Circular, including the notice of meeting and form of proxy.
- Preparing Shareholder Resolutions
Several resolutions need to be prepared for shareholder approval during the SGM. These include:
- Stock Option Plan: A plan for the Resulting Issuer’s stock options for shareholder approval.
- Share Consolidation (if applicable): A resolution for share consolidation, if necessary.
- Transaction Approval: A resolution to approve the RTO transaction itself.
- Name Change: A resolution for changing the name of the company if the new name is required post-RTO.
Action Items:
- Prepare the stock option plan, share consolidation (if needed), transaction approval, and name change resolutions.
- Including Financial Statements and Business Plans
The audited financial statements of the Target Company and the Listed Issuer must be included in the Information Circular. Additionally, a detailed 24-month business plan for the Resulting Issuer should be prepared to provide shareholders with a clear understanding of the company’s future.
Action Items:
- Obtain Target Company audited financial statements from the auditor.
- Obtain Listed Issuer’s audited financial statements and pro forma financials from the auditor.
- Prepare the Resulting Issuer’s 24-month business plan.
- Circulating the Information Circular for Review
Once the draft Information Circular is prepared, it should be circulated to the working group (legal, financial, and business advisors) for review and comments. Any feedback from the group must be incorporated before the document is finalized.
Action Items:
- Circulate the draft Information Circular to the working group.
- Incorporate comments and finalize the circular.
- Filing and Distributing the Information Circular
Once the Information Circular is finalized, it must be filed with the exchange for review and distributed to shareholders. This ensures all regulatory requirements are met, and shareholders are informed of the upcoming vote.
Action Items:
- File the Information Circular, notice of meeting, Share Exchange Agreement, and form of proxy with the exchange for commenting.
- Send the Information Circular to the transfer agent and coordinate delivery to Listed Issuer shareholders.
- Collecting Consents
Legal counsel must obtain consents from the auditors of both the Listed Issuer and Target Company, as well as from any other experts involved in the RTO, before filing the circular.
Action Items:
- Collect consents from Listed Issuer’s auditor, Target Company’s auditor, and any other experts.
Preparing for the Target Company Special General Meeting
- Setting the Record and Meeting Dates
Similar to the Listed Issuer, the Target Company must also hold an SGM to approve the RTO transaction. Legal counsel should coordinate with the transfer agent to set both the record date and the meeting date.
Action Items:
- Target Company’s Legal Counsel to set the record and meeting dates with the transfer agent.
- a) Record date
- b) Meeting date
- Drafting and Distributing the Information Circular
The Target Company must also prepare an Information Circular that includes all necessary documentation related to the RTO. This document will be distributed to Target Company’s shareholders, informing them of the resolutions to be voted on at the meeting.
Action Items:
- Target Company’s Legal Counsel to draft the Information Circular, including the notice of meeting and form of proxy.
- Mail the final form of the Information Circular, notice of meeting, and form of proxy to Target Company’s shareholders.
Conclusion: Finalizing the Special General Meeting
It’s important to remember from Part 1 of this guide to retain an auditor early to begin work on auditing the financial statements. Auditors can get busy, and companies often need extra time to locate previous documents and respond to auditor requests. As a result, the process may take longer than anticipated, so it’s crucial to prepare in advance.
In the next section, we will cover the closing stages of the RTO, including final approvals and post-closing items.
Ready to take your company public?
Whether through a reverse takeover (RTO), direct listing, or IPO, Cyan Capital can help streamline the process and connect you with the right professionals and investors to ensure a successful listing. Stay tuned for the next post, where we’ll continue guiding you through the RTO process.