CSA Publishes Update on Harmonized Regulatory Approach for Take-Over Bids

On September 11, 2014 the Canadian Securities Administrators (CSA) provided an update on a harmonized regulatory proposal based on amendments to the current take-over bid regime, which will be published for comment in early 2015.

Last year on March 14, 2013, two defensive tactics policy proposals were published for comment by the CSA and the Autorité des marchés financiers, respectively, relating to National Policy 62-202 Defensive Tactics. The proposals were intended to address concerns raised with the defensive tactics currently available to boards of target issuers facing unsolicited or hostile take-over bids.

Following a review of the comments on both proposals and further analysis, the CSA have determined to develop a new harmonized regulatory proposal for all Canadian jurisdictions based on amendments to the current take-over bid regime. The proposed amendments are designed to provide target boards with additional time to respond to hostile bids while reserving for shareholders the ability to make voluntary, informed and coordinated tender decisions.

Specifically, the proposed bid amendments would require that all non-exempt take-over bids:

  • be subject to a mandatory majority (more than 50 per cent) minimum tender of all outstanding target securities (excluding tenders by the bidder itself or its joint actors);
  • be extended by the bidder for an additional 10 days once the mandatory minimum tender condition has been met and the bidder has announced its intention to immediately take up and pay for the securities deposited under the bid; and
  • remain open for a minimum of 120 days, subject to the ability of the target board to waive to a period of no less than 35 days in certain circumstances and on certain conditions.

Subject to receipt of necessary approvals, the CSA intend to publish complete details of the proposed amendments for comment during the first quarter of 2015. The proposal would involve amendments to the take-over bid regime contained in Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids (for jurisdictions other than Ontario), Part XX of the Securities Act (Ontario) and Ontario Securities Commission Rule 62-504 Take-Over Bids and Issuer Bids (for Ontario).

To access this CSA Staff Notice click here.