THE Bank of Nova Scotia (BNS or Scotiabank) plans to spend approximately $54 billion to acquire the remaining shares of Scotia Group Jamaica Limited and take the listed financial group private, raising questions about what changes for customers, how minority shareholders will vote, and what happens if the transaction is approved or rejected.

What is the deal?

Scotiabank Caribbean Holdings Limited (SCHL) has offered $61.50 per share for the 878,189,600 Scotia Group Jamaica shares it does not already own.

If the transaction is completed, Scotia Group would become wholly owned by the Scotiabank parent and would no longer be listed on the Jamaica Stock Exchange (JSE). Its banking, investment and insurance businesses are expected to continue operating.

Who are the parties?

The Bank of Nova Scotia is a Canadian financial group with subsidiaries in several markets engaged in banking, insurance, investments and wealth management. Scotiabank Caribbean Holdings is the direct parent company for several operating subsidiaries in the Caribbean, including Scotia Group Jamaica of which it owns 71.78 per cent.

Scotia Group Jamaica is a licensed financial holding company that owns Scotia Investments Jamaica Limited and The Bank of Nova Scotia Jamaica Limited. The Jamaican bank, in turn, owns The Scotia Jamaica Building Society, Scotia Jamaica Life Insurance Company Limited, and Scotia General Insurance Agency Limited, which trades as ScotiaProtect.

Pension funds, unit trusts, managed portfolios and individual investors collectively own the remaining 28.22 per cent of Scotia Group.

What does this mean for your money?

For customers, Scotiabank has said the transaction would have no material effect on the group’s existing operations. Accounts will continue to exist with the relevant businesses, and the Jamaican bank will remain unchanged.

Minority shareholders must now decide whether the proposed $61.50 price fairly compensates them for giving up their shares. The deal is subject to a court-approved scheme of arrangement and a meeting of the affected shareholders convened under the direction of the Supreme Court.

If the required shareholder majorities are not achieved or the Supreme Court declines to sanction the scheme, the transaction cannot proceed in its current form.

If the scheme receives the required shareholder support, is sanctioned by the court and becomes effective, the affected shares would be transferred or cancelled in accordance with the final scheme terms. Shareholders would then receive the stated consideration, without each investor having to accept a separate takeover offer.

The offer is payable in Jamaican dollars (JMD) or United States dollars (USD), depending on the payment options provided in the final scheme documents and the election made by each shareholder.

What are the conditions?

The Companies Act sets out the process through which a company may propose an arrangement affecting its shareholders. Scotia Group Jamaica is expected to apply to the Supreme Court for an order convening a meeting of the minority shareholders to consider the proposed scheme of arrangement.

Under Section 206(2) the scheme must satisfy two voting tests among the relevant shareholders present and voting, either in person or by proxy. More than half of those shareholders, counted by number, must vote in favour, and those supporting the proposal must represent at least 75 per cent of the value of the shares voted.

Both thresholds must be met. Even then, shareholder approval does not automatically complete the transaction. The scheme must return to the Supreme Court, which will decide whether it should be sanctioned.

The voting tests apply only to shareholders who participate in the meeting in person or by proxy. Shareholders who abstain or do not vote will not be counted in determining whether the required majorities have been achieved.

What can happen?

If more than half of the minority shareholders participating in the vote support the scheme, and their shares represent at least 75 per cent of the value of the shares voted, the proposal will have cleared the shareholder-approval stage.

The results would then be presented to the Supreme Court which would decide whether to sanction the scheme. If the court grants approval and the scheme becomes effective, it would bind the affected shareholders, including those who voted against it or did not vote.

The precise payment process and the rights available to shareholders who oppose the transaction should become clearer once the formal scheme circular and court documents are published.

Section 209 of the Companies Act separately provides a mechanism through which an acquiring company may, in specified circumstances, compulsorily acquire shares held by dissenting shareholders after the required proportion of shares covered by an offer or arrangement has been acquired or approved. Whether that provision would be relevant to this transaction will depend on the final structure and terms set out in the scheme documents.

If either of the two Section 206 voting thresholds is missed, the scheme cannot proceed in its current form. It would therefore fail if a majority in number supports it but those shareholders do not represent at least 75 per cent of the value voted. It would also fail if the 75 per cent value threshold is reached but the proposal does not receive the support of a majority of the participating shareholders counted by number.

In that instance, SGJ would continue trading as normal on the JSE. However, Scotiabank Caribbean Holdings could seek to acquire shares through another transaction from shareholders willing to sell, subject to the applicable laws and JSE rules.

The JSE’s Main Market rules generally require at least 100 shareholders to hold no less than 20 per cent of a listed company’s issued ordinary shares. If Scotia Group no longer meets that requirement, its continued listing could come under review, subject to the exchange’s rules, procedures and discretion.

A delisting under those circumstances would not, by itself, cancel the shares held by remaining investors. However, those shareholders could be left owning shares that are no longer traded on the JSE, making them more difficult to buy or sell.

Why are they doing the deal?

According to Scotiabank, “The proposed transaction is part of Scotiabank’s strategy to optimise capital and operational efficiency across its existing footprint.”

Scotiabank has not announced a similar transaction involving Scotiabank Trinidad and Tobago Limited, its other publicly listed Caribbean subsidiary.

Scotiabank has been reducing its direct exposure to some Latin American and Caribbean markets, including through the sale of operations in Colombia, Costa Rica, and Panama to Banco Davivienda SA in exchange for a 20.3 per cent stake in the buyer. It is also increasing its exposure to the United States through its proposed acquisition of Maple Financial Holdings and its investment in KeyCorp.

What has happened in prior schemes?

Several schemes of arrangement involving listed Jamaican companies have received shareholder and court approval, but previous takeover efforts show that neither shareholder acceptance nor court sanction is automatic.

ANSA Coatings International Limited, a subsidiary of ANSA McAL Limited, had surpassed the 50 per cent ownership threshold and made a takeover bid for the remaining Berger Paints Jamaica Limited shares at $10.88 each in August 2017.

The offer fell short after ANSA Coatings acquired only an additional 6.35 per cent of Berger’s ordinary shares, as some investors rejected the price. Mayberry Investments Limited publicly rejected the offer and disagreed with the recommendation from Berger’s independent directors that shareholders accept it.

The proposed Cable & Wireless Jamaica scheme was also not sanctioned after minority shareholder Eric Jason Abrahams challenged the transaction. The courts found, among other things, that the shareholder meeting had not been properly constituted because the controlling shareholder and the minority shareholders whose shares were to be cancelled should not have voted together as one class.

Cable & Wireless Jamaica appealed to the Privy Council but the final appellate court upheld the refusal to sanction the scheme in September 2025. The ruling demonstrates that securing the required votes does not guarantee court approval.

The Cable & Wireless scheme therefore did not become effective, and its proposed mechanism for acquiring the outstanding minority shares was not completed.

What’s next?

Scotia Group is expected to publish a formal scheme circular setting out the transaction timetable, voting arrangements, payment process, independent valuation and the rights available to shareholders.

Shareholders should consult their financial and legal advisers when assessing the offer and the options available to them. They may also contact Scotia Group Jamaica for clarification about the transaction and the documents required to participate in the process.

Until the circular and court directions are published, some details — including the meeting date, payment timetable and treatment of dissenting shareholders — remain subject to confirmation.

Scotiabank is seeking to acquire the remaining shares in its Jamaican subsidiary.