In 2013, the Canadian Securities Administrators published for comment a proposed national instrument on security holder rights plans. The Autorité des marchés financiers also published a consultation paper outlining an alternative proposal relating more generally to defensive tactics. For an overview of the original proposals, please see our March 2013 MarketCaps.

As a result of the comments received on the original proposals, the CSA and AMF have announced that they are not going to proceed with them. Instead, they will be publishing for comment a new proposal that will amend the existing take-over bid regime (the Proposed Bid Amendments). The CSA are still in the process of developing the Proposed Bid Amendments, but are planning to publish them for comment in the first quarter of 2015.

For now, the CSA have indicated that the Proposed Bid Amendments will address key issues identified in the original proposal, as well as the comments received on them. They are looking to facilitate the ability of shareholders to make voluntary, informed and co-ordinated tender decisions, but also provide target boards with additional time to respond to hostile bids, all with a view to rebalancing the current dynamics between hostile bidders and target boards.

The CSA’s announcement provides that the Proposed Bid Amendments would require:

  • a mandatory tender condition that a minimum of more than 50% of all outstanding target securities owned or held by persons other than the bidder and its joint actors be tendered and not withdrawn before the bidder can take up any securities under the bid;
  • an additional 10 day extension of the bid after the bidder achieves the mandatory minimum tender condition and the bidder announces its intention to immediately take up and pay for the securities deposited under the bid; and
  • a bid to remain open for a minimum of 120 days, subject to the ability of the target board to waive, in a non-discriminatory manner when there are multiple bids, the minimum period to a period of no less than 35 days.

The CSA have advised that they are not planning changes to current take-over bid exemptions or the existing defensive tactics policy.