On March 31, 2015, the Canadian Securities Administrators published for comment proposed amendments to Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids and changes to National Policy 62-203 – Take-Over Bids and Issuer Bids (collectively, the Proposed Amendments). The 90-day comment period is open until June 29, 2015.
The Proposed Amendments would require that all non-exempt take-over bids:
- meet a minimum tender requirement in which bidders must receive tenders of more than 50% of the outstanding securities subject to the bid (excluding securities owned by the bidder itself or its joint actors) and such tenders are not withdrawn before the bidder can take up any securities under the take-over bid;
- be extended for an additional 10 days after the minimum tender requirement is met and all other terms of the conditions of the bid have been complied with or waived; and
- remain open for a minimum deposit period of 120 days, unless
a. the target board issues a news release announcing a shorter deposit period of not less than 35 days, in which case all outstanding or subsequent take-over bids will also become subject to the shorter minimum deposit period, or
b. the issuer issues a news release indicating that it has agreed to enter into or determined to effect a specified alternative transaction (e.g., a plan of arrangement or other change of control transaction requiring shareholder approval), in which case all outstanding or subsequent take-over bids must remain open for at least 35 days.
In contrast, the current take-over bid regime provides that 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.
The Proposed Amendments were developed to address concerns raised in connection with the CSA’s review of defensive tactics and are a harmonized policy initiative designed to enhance the quality and integrity of the take-over bid regime. It is expected that the Proposed Amendments will provide increased flexibility for boards of target companies to evaluate and respond to a hostile bid, facilitate the ability of shareholders to make voluntary, informed and coordinated tender decisions, and provide a framework for issuers to attract alternative offers prior to securities being taken up under a take-over bid.