The Canadian Securities Administrators (CSA)
published an update of their proposed changes to the early warning
regime (Canada's equivalent to the Schedule 13D regime in the
United States). The update abandons some of the key proposals, such
as reducing the reporting threshold, put forward by the CSA in
March 2013 (see our March 14, 2013 update,
CSA Proposes Significant Amendments to Early Warning
Regime) and reflects what appears to be a firm intention
to proceed with other changes to the system in the second quarter
On March 13, 2013, the CSA published for comment draft
amendments to the early warning regime that would have, among other
things, reduced the reporting threshold from 10% to 5% and required
enhanced disclosure to address concerns about, "hidden
ownership", "empty voting arrangements" and limited
disclosure by eligible institutional investors that might be
engaged in the solicitation of proxies under the current
The amendments proposed by the CSA elicited more than 70 comment
letters. Those providing comments on the proposed amendments
generally agreed with the CSA's objective of "enhanced
transparency". However, a majority expressed concern that
potential unintended consequences of certain elements of the
increased transparency might outweigh the benefits of the enhanced
disclosure as a result of, among other things:
the potential hindering of an investor's ability to
accumulate or reduce a large position as a result of the signalling
of investment strategies to the market, and
the complexity and difficulty of applying a new early warning
reporting trigger in respect of "equity equivalent
The CSA indicated that, based on the comments received, they
concluded that they will not proceed at this time
with their proposals to:
bring the Canadian regime in line with the regime in the United
States by reducing the reporting threshold to 5%, or
include "equity equivalent derivatives" for the
purposes of the reporting threshold.
The CSA will, subject to necessary approvals (which may not
include a further round of comment), publish final amendments to
the early warning regime in the second quarter of 2015 that
require disclosure where ownership of a person reporting under
the regime decreases 2% or falls below the 10% reporting
preclude eligible institutional investors that solicit, or
intend to solicit, proxies on matters relating to the election of
directors or a reorganization, amalgamation, merger, arrangement or
similar corporate action involving the securities of a reporting
issuer from relying on the alternative monthly reporting system
that is available to "passive" eligible institutional
not require disclosure by lenders of shares pursuant to a
specified securities lending arrangement or borrowers of shares, in
certain circumstances, under a securities lending arrangement,
require disclosure of derivatives in the early warning report;
clarify the application of early warning reporting requirements
to certain derivatives and the timeframe for filing the early
warning reports and news releases.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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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.
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