On February 25, 2016, the Canadian Securities Administrators
published final amendments to the rules governing take over bids in
Canada that mark the completion of the process to enhance the
quality and integrity of Canada's take-over bid regime and
rebalance the current dynamics among offerors and boards of
directors and security holders of targets.
The principal change from the prior proposal is that a formal
take-over bid will be required to remain open for acceptance for a
minimum of 105 days, rather than the previously proposed 120 days,
unless the target board consents to a shorter period. This will
facilitate the use of the compulsory acquisition provisions under
Canadian corporate statutes, which provide that an offeror can
acquire the remaining outstanding securities of a class of a target
entity without the approval of the holders of such securities if,
within 120 days of making a take-over bid for those securities, the
offeror's bid is accepted by holders of 90 per cent or more of
the outstanding securities of such class (excluding securities
owned by the offeror and its affiliates and associates). The prior
proposal may not have allowed for the use of the compulsory
acquisition provisions, as it is typical not to reach the 90 per
cent threshold until an offeror has extended its bid at least once
following the first take-up of securities under the bid, and under
the prior proposal a bid would have been required to remain
outstanding for a minimum of 120 days plus a mandatory 10-day
extension (i.e., if the 90 per cent acceptance threshold is not
reached until after the first extension, the compulsory acquisition
120-day timeframe would not be satisfied). The reduction of the
minimum tender period to 105 days allows the offeror to satisfy the
minimum tender period and complete its mandatory 10-day extension
prior to the 120-day compulsory acquisition cut-off.
Given that hostile take-over bids generally take 60-75 days to
complete, the increase to a minimum of 105 days remains a
significant change that will provide the target board additional
time to identify and explore other value-maximizing
The new take-over bid regime will require that all formal
Remain open for a minimum of 105 days,
subject to a reduction of the minimum deposit period (i) to no less
than 35 days with the consent of the target board, provided that
when there are multiple contemporaneous bids, each bid shall be
permitted to have that same minimum deposit period or (ii) if the
target enters into or determines to effect a board-supported change
of control transaction, such as a plan of arrangement, to a minimum
deposit period for any contemporaneous take-over bid of 35
Be subject to a minimum tender condition of more
than 50 per cent of the outstanding securities of the class subject
to the bid, excluding target securities held by the bidder and its
Be extended for at least 10 days after the bidder
first takes up securities under the bid (with partial take-over
bids requiring an extension of exactly 10
IMPLEMENTATION AND TRANSITION PROVISIONS
It is expected that the amendments will come into force on May
9, 2016 in all Canadian jurisdictions other than Ontario. In
Ontario, the amendments will become effective on the later of May
9, 2016 and the day on which certain sections of Schedule 18 of the
Budget Measures Act, 2015 (Ontario) are proclaimed into force.
The new take-over bid rules will not apply to:
Any take-over bid commenced before May
Any take-over bid commenced on or after May
9, 2016 that relates to securities for which another take-over bid
had been commenced prior to May 9, 2016, provided that such
original bid had not expired before the second bid was
Any take over bid commenced on or after May
9, 2016 that relates to securities of a target that issued a news
release before May 9, 2016 announcing that it intends to effect an
alternative transaction (for example, a plan of arrangement
transaction), provided such alternative transaction has not been
completed or abandoned prior to the commencement of the
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