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Amendments to National Instrument 62-103 Early Warning System and Related Take-over Bid and Insider Reporting Issues, Multilateral Instrument 62-104, Take-Over Bids and Issuer Bids and to National Policy 62-203, Take-Over Bids and Issuer Bids [Completed]

Issued: February 25, 2016

Transitional provisions:

Except in Ontario, provided all Ministerial approvals are obtained, the amendments to the early warning system and to the take-over bid regime will come into force on May 9, 2016. In Ontario, the amendments will come into force on the later of: a) May 9, 2016, and b) the day on which certain sections of Schedule 18 of the Budget Measures Act, 2015 (Ontario) are proclaimed into force.

Last updated:

February 2016

Overview

The February 2016 amendments consist of amendments to (a) the early warning system; and (b) the take-over bid regime. They are the result of a harmonized CSA policy initiative designed to enhance the quality and integrity of these processes.

The amendments to the early warning system will, among other things, (i) require disclosure of decreases in ownership, control or direction of 2 per cent or more for security-holders subject to reporting; (ii) require disclosure when a security-holder’s ownership, control or direction falls below the early warning reporting threshold of 10 per cent; (iii) exempt lenders and borrowers, in certain circumstances, from including the securities lent or borrowed for the purposes of determining the early warning reporting threshold trigger; (iv) make the alternative monthly reporting system unavailable to eligible institutional investors who solicit proxies from security holders in certain circumstances; (v) enhance the disclosure in the early warning report; and (vi) further streamline the information required in a news release.

The amendments to the take-over bid regime will require that (i) as a fundamental change, all non-exempt take-over bids meet a minimum tender requirement 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). (ii) there is a minimum deposit period of 105 days, subject to exceptions that allow for a shorter minimum period, either at the discretion of the target board, or in the event that the issuer enters into a specified alternative transaction; and (iii) the minimum deposit period will be subject to an extension period of a minimum of 10 days after the minimum tender requirement and all other conditions are met.

Under the existing 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.

Multilateral Instrument 62-104, Take-Over Bids and Issuer Bids and the corresponding Ontario take-over bid regime were substantively the same. As part of the amendments, On­tario will (i) repeal Ontario Securities Commission Rule 62-504, Take-Over Bids and Issuer Bids; (ii) make amendments to Part XX of the Securities Act (Ontario) and (iii) adopt Multilateral Instrument 62-104, Take-Over Bids and Issuer Bids and adopt National Policy 62-203 Take-Over Bids and Issuer Bids.

Recent activities

February 2016

On February 25, 2016, the CSA the published (i) final amendments that are designed to provide greater transparency about holdings of reporting issuers’ securities under the early warning system; and (ii) final amendments to the regime that governs take-over bids in Canada.

March 2015

On March 31, 2015, the CSA published for comment proposed amendments to the Canadian take-over bid regime set out in Multilateral Instrument 62-104, Take-Over Bids and Issuer Bids, and National Policy 62-203, Take-Over Bids and Issuer Bids.

October 2014

On October 10, 2014, the CSA published CSA Notice 62-307, Update on Proposed Amendments to Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids, National Instrument 62-103 Early Warning System and Related Take-Over Bid and Insider Reporting Issues and National Policy 62-203 Take-Over Bids and Issuer Bids, which provides an update to market participants on the status of proposed amendments to the early warning reporting regime (the Draft Amendments).

The CSA received over 70 comment letters from various market participants on the Draft Amendments. While the commenters generally agreed with the enhanced transparency objective of the CSA proposals, a majority of commenters raised various concerns about certain of the Draft Amendments.

“Based on comments received and our further consideration, we have decided not to proceed with certain of the Draft Amendments, including the lower early warning reporting threshold of five per cent,” said Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission.


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