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The Parti Québécois government is on the verge of introducing legislation that will enact stringent anti-takeover proposals to protect Quebec companies.

“The government proposes to move quickly to propose legislative changes to enable Québec incorporated companies to institute the most far reaching board entrenchment provisions against unsolicited takeovers of any jurisdiction in North America,” Nicholas Dietrich, corporate finance and M&A lawyer with Gowling Lafleur Henderson, wrote in the firm’s MarketCaps@Gowlingsnewsletter.In a press release that accompanied the tabling of the Quebec budget for 2014-15, Nicolas Marceau, Minister of Finance and the Economy, is said to be “reacting very favourably to the Report of the Task Force on the Protection of Québec Businesses.”

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Marceau intends to expedite legislative amendments that will permit publicly-traded Quebec corporations to include various anti-takeover provisions in their articles. Dietrich says the proposed amendments “are a strong departure from the current state of affairs” and include additional voting rights for longer-term beneficial shareholders; a five-year prohibition on mergers or amalgamations; a deemed “giving” to the corporation of profits made by acquirers on shares purchased in pursuing a takeover bid; a form of tenure for existing directors; and restrictions on the right of acquirers from voting shares acquired after a bid is launched.

“What is at stake is nothing less than who prevails in change-of-control scenarios: directors or the owners of businesses (the shareholders),” Dietrich writes. “American investors, in particular, who, along with Canadian institutional investors, maintain a robust market in improving underperforming companies, will quickly see that the proposals go well beyond the most far-reaching constituency state statutes promoting local industrial development at the expense of owners of these businesses.”