CANADA: Changes proposed to takeover rules

Tuesday March 31 2015

Further to the update of 11th September 2014, the Canadian Securities Administrators (CSA) have published for comment proposed amendments to the Canadian take-over bid regime. The 90-day comment period on the Proposed Bid Amendments ends on June 29, 2015.

The CSA Notice and Request for Comment for the Proposed Bid Amendments propose changes to Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and National Policy 62-203 Take-Over Bids and Issuer Bids, among other instruments.

Currently, MI 62-104 governs take-over bids and issuer bids in all jurisdictions of Canada, except Ontario. In Ontario, substantively harmonized requirements for take-over bids and issuer bids are set out in Part XX of the Securities Act (Ontario) (the Ontario Act) and Ontario Securities Commission Rule 62-504 Take-Over Bids and Issuer Bids (the Ontario Rule). NP 62-203 applies in all jurisdictions of Canada. In this Notice, MI 62-104, the Ontario Act, the Ontario Rule and NP 62-203 are collectively referred to as the take-over bid regime or bid regime.

The CSA first announced the Proposed Bid Amendments as a result of their proposals to address concerns raised with the CSA’s review of defensive tactics under their respective public interest jurisdictions. The Proposed Bid Amendments are a harmonized CSA policy initiative designed to enhance the quality and integrity of the take-over bid regime. These changes would provide increased flexibility for boards of targeted companies, as well as allow for collective decision-making by shareholders.

The Proposed Bid Amendments would require that all non-exempt take-over bids:

• meet a minimum tender requirement where bidders must receive tenders of more than 50 per cent of the outstanding securities that are subject to the bid (excluding securities owned by the bidder itself or its joint actors);

• be extended for an additional 10 days after the minimum tender requirement is met and all other terms and conditions of the bid have been complied with or waived; and

• remain open for a minimum deposit period of 120 days, unless the target board states in a news release an acceptable shorter deposit period of not less than 35 days, in which case the shorter period would apply to all concurrent take-over bids.

Under the current regime, non-exempt take-over bids must remain open for 35 days and are not subject to any minimum tender requirement or an extension requirement once the bidder has taken up deposited securities.

Click on the above link for more details.