TORONTO - The vote on Magna International Inc's plan to pay its founder nearly $900 million to give up his controlling shares will go ahead, but only after the company complies with an order by an Ontario regulator to give shareholders more information on the deal.

Magna said on Friday it would set a new date in due course for the shareholder vote it had planned for Monday.

The world's No. 3 auto-parts maker made the move after the Ontario Securities Commission ruled late on Thursday that before Magna holds a vote it must amend the information circular on the deal that it sent to investors.

The company proposes to pay founder and Chairman Frank Stronach $300 million in cash and 9 million class A shares to give up his controlling class B shares. That would work out to be an $864 million payday based on Magna's closing share price the day before the proposal was announced in May.

The OSC said in its ruling that it was not persuaded that Magna's plan was abusive to shareholders as had been alleged by OSC staff and some shareholders.

Magna said in a release that it welcomed the ruling.

We intend to work cooperatively with the OSC staff to address the commission's concerns and comply with the OSC's additional disclosure requirements, said Vincent Galifi, Magna's chief financial officer.

We welcome the commission's position that shareholders should decide the outcome of the transaction. We will work to bring the proposed transaction back to our shareholders for consideration in an expeditious manner.

CHALLENGES TO DEAL

Earlier this month a few prominent Canadian pension plans came out swinging against the Magna proposal, calling the payoff unreasonable and fundamentally unfair.

The plan was then challenged by staff at Ontario's provincial securities regulator, who requested a hearing and alleged the proposal was contrary to the public interest and harmful to the integrity of the Ontario capital markets.

But a three-person Ontario Securities Commission panel ruled it was not convinced the proposed deal was abusive to shareholders.

Abuse has been characterized by commission decisions as something more than unfairness, the ruling said. A transaction such as this is not abusive simply because the price proposed to be paid is considered by certain investors to be outrageous.

The panel laid out a long list of information it said should be provided to shareholders before they would vote on the deal, including a clear articulation of how management and Magna's board decided on the amount to pay Stronach.

Magna must deliver a copy of the amended circular to the regulator at least five days before it is sent to shareholders. This would give the regulator's staff time to raise any concerns about the level of disclosure.

VOTE LOOKED SET TO PASS

In early voting ahead of the OSC ruling, shareholders looked ready to approve the plan overwhelmingly.

Stronach, 77, came to Canada from Austria as a young man with just a couple of hundred dollars in his pocket and built the company into a global player. Magna came close to buying Chrysler in 2007, and nearly had a deal to buy Opel from General Motors Co [GM.UL] last year until GM decided to keep the European carmaker.

Some shareholders have long complained about Stronach's control of the company, his consulting fees, and his side projects, including the now-bankrupt Magna Entertainment horse-track and entertainment venture.

Each of Stronach's class B share carries 300 votes, versus one vote for each class A share. That allows Stronach to control the company while owning just 0.6 percent of the equity.

The day Magna announced the plan to pay off Stronach, several analysts raised their price targets for the company, and its shares surged 14 percent.

Magna's shares were down 30 Canadian cents at C$72.70 on the Toronto Stock Exchange shortly after the market opened on Friday morning.

($1=$1.04 Canadian) (Editing by Peter Galloway)

Canada