We have assisted over
70 operating companies moving onto the OTC Bulletin Board. Many of these
transactions were by way of acquisition of a shell company and the
subsequent merger or acquisition of the operating company into that shell.
These transactions are commonly referred to as a reverse merger, backdoor
listing, reverse takeover or a RTO. We have also completed a a number of
reverse takeovers of TSX Venture Exchange listed companies and assisted a
number of clients in straight merger and acquisition transactions. Many of
these transactions involved two or more legal jurisdictions, tight time
frames and specific legal issues key to that particular transaction. There
are very few cookie cut deals and often structure is key to protect the
interests of everyone involved.
If you are thinking of going public through a reverse takeover you need to
know what your options are in this area and what you are actually buying.
Shell company finders and non-lawyer going public companies are unlikely
to tell you everything you need to know. Their interests are very
different than your interests. They want to sell you a shell and make
money. You want a vehicle to help your company move forward with its
business plans. You don’t want to be in the position of paying too much
for a shell company or having purchased a huge liability. We have the
experience to source, negotiate, review and structure your reverse
takeover transaction to maximize your interests and long term goals. We
know this area, who has shells, the history of the principals involved and
the problems inherent in these types of transactions.
If you are looking to acquire an active company or business due diligence
is key. In vetting companies for clients we have found many instances of:
illegal share issuances; offside tax loans to principals; undisclosed
lawsuits; undisclosed regulatory sanctions against the principals and or
the company; improperly registered bankruptcy, patent and |
trademark documents; foreclosure proceeding imminent by lenders;
contractual breaches key to preserving the assets of the company;
undisclosed superfund registration; and other skeletons the other side has
forgot to mention or considered “not important”. We have helped clients
find solutions or worked on damage control in many of these instances when
walking away was not an option.
Cross-border deals also carry their own issues related to the securities
and tax laws of the different jurisdictions involved. Sometimes the
solution here involves obtaining an exemption order, a no action letter,
or leaving someone or something out of the transaction. Exchangeable
shares are often part of the solution for US companies acquiring Canadian
operating companies.
Contact our office for more information about how we can help you close
your next RTO, merger or acquisition.
Venture Law Corporation
618 - 688 West Hastings Street
Vancouver, British Columbia
V6B 1P1
Phone: 604-659-9188
Fax: 604-659-9178
E-mail Us
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