CANADA: Quebec regulator launches consultation on defensive tactics in Canada takeovers

Wednesday March 20 2013

Further to the update of 26 November 2012, and in parallel with the launch of a national consultation on hostile bids, the Quebec securities regulator the AMF has published a wider public consultation on defensive tactics in Canada takeovers. 

The CSA Proposal relates only to rights plans. The accompanying Notice and Request for Comment states that participating CSA members will consider in the future whether further changes should be made to National Policy 62-202 Take-Over Bids – Defensive Tactics (“NP 62-202”) with respect to other defensive tactics.

The Quebec AMF is of the view that recent decisions, among other factors, have created the proper context to review at this time the regulatory framework with respect to all defensive tactics, not only rights plans.

The primary objective of the AMF Proposal is to restore the regulatory balance between bidders and target boards and update the policy framework of the take-over bid regime to reflect the current legal and economic environment and market practices respecting unsolicited take-over bids. The AMF consultation proposes to reconsider the current approach to defensive tactics embedded in NP 62-202 and introduce two significant changes to the take-over bid regime.

The AMF proposes to replace NP 62-202 with a new policy on defensive tactics that would clearly recognize the fiduciary duty of directors to the corporation in responding to an unsolicited take-over bid and would redefine Regulators’ intervention on the ground of public interest.

It further proposes to change the take-over bid regime to require, as an irrevocable condition of any bid for all securities of a class, and for any partial bids, that more than 50% of the outstanding securities of the class held by persons other than the offeror and those acting in concert with it be tendered and not withdrawn on the date the bid would otherwise expire. It also proposes that the bid be extended for 10 days following the announcement that this percentage of securities has been tendered.

In addition to the publication of a new policy replacing NP 62-202, the implementation of the AMF Proposal would also entail amendments to the Securities Act (Québec) and Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids.

The consultation is open until 12th June 2013.

Click on the above link for the consultation paper.