Plan of arrangement

A plan of arrangement is one route when a company is reorganized, combined or taken private: the steps go to a court for approval. For a buyer, it adds a court application to the timetable. If a shareholder objects, see how dissent rights work in a buyout or reorganization.

What the federal Act says

Under section 192(1) of the Canada Business Corporations Act, “arrangement” includes an amalgamation of two or more corporations, a division of the business carried on by a corporation, and a transfer of all or substantially all of its property to another body corporate in exchange for property, money or securities. It also includes a going-private or squeeze-out transaction. Under s. 192(3), a corporation that is not insolvent may apply to a court to approve an arrangement it proposes where it is not practicable to make the change under any other provision of the Act, and s. 192(4) lets the court make any interim or final order it thinks fit.

British Columbia and Alberta

British Columbia’s Business Corporations Act deals with arrangements in Part 9, Division 5. A company may propose one to shareholders, creditors or other persons, and it must be adopted under s. 289 and approved by the court under s. 291 before it takes effect (s. 288(2)). Alberta’s Act covers court-approved arrangements in s. 193. This entry covers the federal, British Columbia and Alberta Acts only. Confirm which statute governs the target company, and whether the court order permits shareholders to dissent.