Canadian Securities Regulators Substantially Change Take-Over Bid Rules


On February 25, 2016, the Canadian Securities Administrators (“CSA”) announced amendments to take-over bid rules in Canada. The changes, as reflected in National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) and National Policy 62-203 Take-Over Bids and Issuer Bids, are intended to enhance the quality and integrity of the take-over bid regime while rebalancing the dynamics among bidders, target company boards of directors and target company shareholders during a take-over bid.

In a fundamental change, the new take-over bid rules will require that all non-exempt take-over bids must 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). The current rules do not have any minimum tender requirements.

The new rules also require a minimum deposit period of 105 days (up from the current 35 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. Further, 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; currently, there is no extension requirement.

“The new regime will enhance the ability of the security holders to make voluntary, informed and coordinated tender decisions while providing boards with additional time and discretion when responding to a take-over bid,” said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers.

The Amendments will come into force on May 9, 2016 (Ontario may be delayed).

If you have questions about take-over bids, contact any member of Clark Wilson’s Corporate Finance & Securities Group.