The Alberta Securities Commission has issued its reasons for striking down a last minute attempt to adopt a “poison pill” shareholder rights plan by Tartan Energy Inc., in an effort to thwart a takeover by Nations Energy Co. Ltd.

Following a hearing on July 19, the ASC issued a cease-trade order with respect the shareholder rights plan adopted by Tartan Energy with reasons for decision to follow. The commission released those reasons for decision today.

In those reasons, it noted, “We believe there is a public interest in a fair and predictable process for the conduct of take-over bids. Not only can a measure of predictability be important once a bid has been launched, it can also be a factor in motivating bidders to enter into the process in the first place.”

In this case if the poison pill was allowed, the ASC concluded it, “might without any input from Tartan shareholders, frustrate a take-over bid made to them and conducted, so far as we know, in accordance with securities laws.”

“On grounds of inconvenience alone, we considered Tartan’s actions unfair to Nations,” it said. “We also considered that Tartan’s adoption of the plan at this late date, had it not been challenged, could have undermined the predictability of the take-over bid process generally. This in our view would operate to the detriment of other market participants who in future might find themselves pondering, or engaged in some capacity in, a takeover bid of their own and wondering how they ought to proceed or not proceed. We believe that no one, except possibly management of a bid target who seek to entrench their position, would benefit from such uncertainty and unpredictability.”

“For all these reasons, we concluded that Tartan’s adoption of the plan was an egregiously inappropriate tactical defensive measure,” the commission said in its decision. “There was no assurance that it would serve to enhance or realize value for Tartan shareholders. A very real risk was that the plan could deprive them of the one offer before them. The plan, we believe, was not in the best interests of Tartan shareholders. We therefore determined that we ought not to allow the Plan to operate, and that it was in the public interest to issue orders to that effect.”

The commission added that the only real questions it faced were: whether some information of material importance was omitted or misstated; and if so, whether Tartan shareholders were thereby prejudiced in their ability to make an informed decision as to how to respond to the bid. “We found no basis for concluding that the disclosure fell short of legal requirements,” it said. “Accordingly, we could not find that the remedy requested by Tartan – an order, essentially, that Nations revise its disclosure and extend the bid to allow for the amended disclosure to be disseminated and digested by Tartan shareholders – would be in the public interest.” It declined to make that order, and dismissed Tartan’s application.