Canada: The CSA Announces Proposed Amendments To The Take-Over Bid Regime

On March 31, 2015, the Canadian Securities Administrators (CSA) announced the publication of proposed amendments to the Canadian take-over bid rules.


The amendments announced on March 31, 2015 followed an 18-month consultation period by Canadian securities regulators following the original competing proposals to the regulation of defensive tactics and reform of the existing take-over bid regime announced on September 11, 2014, by the CSA and the Authorité des marchés financiers (AMF). The original September 11, 2014, amendments were summarized in our article, The CSA Proposes a New Harmonized Take-Over Bid Approach, published on September 15, 2014.

The proposed amendments released by the CSA on March 31, 2015, represent an attempted compromise between the divergent proposals formerly put forth by the CSA and the AMF, and as a result of the harmonized regulatory approach reflected in the proposed amendments the CSA and the AMF have abandoned the original September 11, 2014, proposals in favour of a coordinated approach for all Canadian jurisdictions.

A New Harmonized Approach

The proposed changes to the Canadian take-over bid regime are consistent with the guidance provided by the CSA in September 2014 and require all non-exempt take-over bids for Canadian public targets to have the following mandatory features:

  • Irrevocable Minimum Tender Condition – A minimum of more than 50 percent of all outstanding target securities owned or held by persons other than the bidder and its joint actors must be tendered and not withdrawn before the bidder can take up any securities under the bid.
  • 10-Day Bid Extension – Bids must be extended by the bidder for an additional 10 days after the bidder achieves the minimum tender condition and the bidder announces its intention to immediately take up and pay for the securities deposited under the bid.
  • 120-Day Bid Period – Bids must remain open for a minimum of 120 days, which represents a significant increase from both the currently mandated 35-day period and the 60-day period typically permitted before a shareholder rights plan or poison pill is cease-traded. This 120-day period is subject to two exceptions: (1) where the target board issues a news release in respect of a proposed or commenced bid in which it prescribes a shorter bid period of at least 35 days, all outstanding or subsequent take-over bids must remain open for at least the stated shorter bid period; and (2) where the target board issues a news release indicating that the board has entered into an alternative change of control transaction (such as a plan of arrangement) all outstanding or subsequent take-over bids must remain open for a period of at least 35 days.

According to the CSA, the proposed amendments are intended to "enhance the quality and integrity of the take-over bid regime" by providing boards of directors of target companies with additional time and discretion to respond to hostile bids and "facilitating the ability of target shareholders to make voluntary, informed and coordinated tender decisions".

The proposed amendments apply to all take-over bids, other than exempt bids which include: (1) bids made through private agreement, wherein a bid is made to five or fewer persons, there are more than five persons holding the securities subject to the bid, and the consideration paid for those securities is no greater than 115 percent of their value; and (2) bids for securities of non-reporting issuers, wherein there is no published market for the targeted securities and the number of holders of targeted securities is 50 or fewer.


The CSA expects that the proposed amendments will mitigate the coercive aspects of the current tender process, support collective majority security holder decision-making, increase leverage for target boards, increase the proportion of higher quality bids and lead to fewer partial take-over bids. The proposed amendments essentially codify the generally accepted requirements for a "permitted bid" under shareholders rights plans.

By requiring that the 50-percent minimum tender condition be met by target securities held only by non-bidding parties in a bid, the CSA is ensuring that minority shareholders are protected from the potential coercion of a controlling bidder by dictating that the "majority of the minority" shall rule the day. Interestingly, the CSA has chosen this approach rather than a regime that would allow a target board to "just say no".

As noted previously, the proposed amendments will allow target boards more time to find alternatives to hostile bids and to communicate with shareholders and may lead to more unsolicited competing bids. The proposed amendments will also impose additional challenges for hostile bidders, for example by impeding the ability of a bidder to acquire a toe-hold position through partial bids. Hostile bidders may also be faced with increased financial costs associated with keeping their bids open longer.

Since the purpose of the proposed 120-day minimum bid period is to afford target boards with sufficient time to respond to unsolicited bids, the CSA indicates that target boards will not need the 120-day minimum period where that board has determined to engage in a friendly, alternative transaction. Nevertheless, a potential "white knight" may still insist on having a longer deposit period than that proposed by a target board in negotiations, in which case target boards may be required to covenant they will not reduce the 120-day bid period in arrangement agreements going forward. Conversely, a potential bidder negotiating a standstill provision in a confidentiality agreement may require that if the target company becomes "in play", the standstill provision will be negated so that it is able to bid, and the 120-day bid period will be reduced to the 35-day minimum.

Given that current CSA policy on defensive tactics will not change, it remains to be seen how significantly these amendments will change the take-over bid landscape for target boards. It is unclear from the proposed amendments how shareholder rights plans will be treated in the context of an increased bid period, and whether a rights plan would be allowed to stand beyond a 120-day bid period. Shareholder rights plans may continue to be an effective tool against "creeping" takeovers via private agreement or otherwise, but may continue to be successfully challenged by hostile bidders if used to delay a bid beyond the 120-day bid period. Given that the changes are intended to rebalance the dynamics between bidders and target boards, the CSA may be more likely to agree when hostile bidders argue that "the pill must go".

Next Steps

The CSA will solicit comments in respect of the proposed amendments to the take-over bid rules until June 29, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Ted R. Gotlieb
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.