The Canadian Securities Administrators (CSA) have adopted
amendments to the early warning requirements in National Instrument
62-103 The Early Warning System and Related Take-Over Bid and
Insider Reporting Issues and associated changes to
Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and
National Policy 62-203 Take-Over Bids and Issuer Bids
(collectively, the "Early Warning
Amendments"). The Early Warning Amendments are
expected to come into force at the same time as the changes to the
take-over bid regime on May 9, 2016.
The following are the key changes resulting from the Early
Enhanced disclosure is now required regarding the intention of
the acquirer and the purpose for the acquisition. This includes
disclosure of any intention to change the board or management, sell
or transfer material assets, effect a corporate transaction
involving the reporting issuer, change the capitalization or
dividend policy, change the reporting issuer's charter or
by-laws in a way that might impede the acquisition of control, or
Enhanced disclosure is now required regarding the material
terms of any related financial instruments, securities lending
arrangements and other arrangements in respect of a reporting
It was clarified that early warning news releases must be
issued by the opening of trading on the next business day.
Disclosure is now required for decreases in ownership of a
reporting issuer of 2% or more and also for ownership falling below
the 10% reporting threshold.
Lenders are now granted an exemption from the early warning
reporting trigger for securities transferred or lent pursuant to a
"specified securities lending arrangement." A
"specified securities lending arrangement" is a
securities lending arrangement (i) that is in writing, (ii) that
requires the borrower to pay to the lender amounts equal to all
dividends or interest, (iii) for which the lender maintains records
of all securities that it has transferred or lent under such
arrangements, and (iv) under which the lender either has the
unrestricted right to recall all the securities transferred before
the record date for voting or requires the borrower to vote the
securities transferred or let in accordance with the lender's
Guidance was added to NP 62-203 regarding the circumstances in
which an investor may have to include an equity swap or similar
derivative arrangement in the calculation of reporting thresholds.
This could occur when the investor has the ability to obtain the
voting or equity securities or to direct the voting of voting
securities held by any counterparties to the transaction.
Eligible institutional investors will be prevented from using
the Alternative Monthly Reporting System if they solicit proxies to
(i) support the election of a director of a reporting issuer other
than the persons proposed by management or (ii) support an M&A
transaction that is not supported by management or oppose an
M&A transaction that is recommended by management.
1 The CSA recently adopted significant amendments to
Canada's take-over bid regime that will also come into force on
May 9, 2016. See our bulletin on this topic
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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