HALIFAX – DHX Media has received an exemption to treat its common voting shares and variable voting shares as a single class for the purposes of applicable take-over bid and related early warning reporting requirements under Canadian securities laws.
DHX said that it applied for the exemption with a view to reducing apprehension of inadvertently triggering takeover bid rules and early warning requirements and to facilitate investment in its shares, particularly variable voting shares by non-Canadians (as defined under the Broadcasting Act (Canada)).
The decision takes into account the fact that the common voting shares and variable voting shares have identical terms except for the foreign ownership voting limitations applicable to the variable voting shares. The decision also takes into account the automatic conversion feature of DHX's dual class share structure, whereby, although an investor may acquire either class of shares, the class of shares ultimately held by an investor is a function of the investor's Canadian or non-Canadian status. As a result, the number of shares outstanding in each class varies while the aggregate number of shares of both classes remains unchanged, giving shareholders little certainty as to the number of shares outstanding in each class at any given time.
The decision acknowledges that there may be, from time to time, a significantly smaller public float and a significantly smaller trading volume of variable voting shares (compared to the public float and trading volume of common voting shares). Together, these considerations make it more difficult for investors, particularly non-Canadian investors to acquire shares of DHX in the ordinary course without the apprehension of inadvertently triggering the takeover bid rules and early warning requirements (considering the application of such rules to the acquisition of shares of a class) and could potentially restrict the interest of non-Canadian investors in DHX's shares for reasons unrelated to their investment objectives.
DHX's wholly-owned subsidiary, DHX Television Ltd. operates the Family suite of television channels and holds the associated broadcasting licences under the Broadcasting Act. DHX's dual class share capital structure was implemented solely to ensure compliance with the Canadian ownership rules under the Broadcasting Act.
