As we discussed in March 2013,
the CSA last year proposed amendments to the reporting threshold,
triggers and related disclosure requirements under Canada's
early warning reporting regime intended to "provide greater
transparency about significant holdings of issuers'
securities". While the most significant change under the 2013
proposal would have been to decrease the reporting threshold from
10% to 5%, the CSA also proposed a number of other significant
reforms, including greater transparency through reporting of
"equity equivalent derivatives" in order to address
issues such as "hidden ownership" and "empty
In today's release, the CSA note that a majority of the over
70 comment letters received in response to the 2013 proposals
expressed concern with the potential unintended consequences
resulting from some of the proposed amendments to the early warning
regime. In what is sure to be a welcome development for most market
participants, the CSA have decided against moving forward with the
proposed reduction of the reporting threshold to 5% or the proposed
inclusion of equity equivalent derivatives in the determination of
the early warning threshold. An equity equivalent derivative would
have been defined as a derivative that was referenced to or derived
from a voting or equity security of an issuer and that provided the
holder, directly or indirectly, with an economic interest that was
substantially equivalent to the economic interest associated with
beneficial ownership of the security (the examples provided
included cash-settled total return swaps and contracts for
Today's announcement is a status update only with the
details to follow when final amendments are published, which is
expected to be in Q2 2015.
According to today's announcement, the final amendments will
incorporate a number of other previously proposed reforms,
including requiring disclosure of 2% decreases in ownership as well
as when ownership falls below the reporting threshold (i.e.
"exit" reports). Another significant aspect of the 2013
proposal included proposed amendments to address securities lending
arrangements. These will also be dealt with in the final amendments
by exempting lenders from disclosure requirements if they lend
shares pursuant to a "specified securities lending
arrangement" and exempting borrowers from disclosure
requirements in certain circumstances. As set out in the 2013
proposal, a "specified securities lending arrangement"
required, among other things, that the lender have an unrestricted
ability to recall the securities before a meeting of
securityholders and/or to instruct the borrower how to vote the
Proposals to expand the circumstances under which eligible
institutional investors (EIIs) will be disqualified from
alternative monthly reporting (AMR) will also go forward. In the
2013 proposal, the CSA had proposed to make the AMR regime
unavailable where an EII solicits, or intends to solicit, proxies
from securityholders of a reporting issuer on matters relating to
the election of directors of the reporting issuer or a
reorganization, amalgamation, merger, arrangement or similar
corporate action involving the securities of the reporting issuer.
In today's announcement, the CSA have indicated that they will
provide further clarification on the circumstances where such
exclusion would apply.
The final amendments will also clarify the application of early
warning requirements to certain derivatives as well as enhance
disclosure requirements and clarify timeframes for filing.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).