The Canadian Securities Administrators
("CSA") have announced final amendments
(the "Amendments") to the early warning
system designed to provide greater transparency about the
securities holdings of Canadian reporting issuers.
The Current Early Warning System
The current early warning system is designed to disseminate
information to market participants once certain security holders
obtain ownership, control or direction over 10% of a certain class
of voting or equity securities of a Canadian reporting issuer, and
each subsequent 2% increase thereafter.
The Approved Amendments
Effective as of May 9, 2016,1 the Amendments will
alter Multilateral Instrument 62-104 Take-Over Bids and Issuer
Bids; National Instrument 62-103 The Early Warning System
and Related Take-Over Bid and Insider Reporting Issues; and
National Policy 62-203 Take-Over Bids and Issuer Bids.
Once in effect, the Amendments will:
require disclosure of decreases in ownership, control or
direction of 2% or more for security holders subject to
require disclosure when a security holder's ownership,
control or direction falls below the early warning reporting
threshold of 10%;
exempt lenders and borrowers, in certain circumstances, from
including the securities lent or borrowed for the purposes of
determining the early warning reporting threshold
make the alternative monthly reporting system unavailable to
eligible institutional investors who solicit proxies from security
holders in certain circumstances;
require disclosure in the early warning report of an interest
in a related financial instrument, a securities lending arrangement
and other agreement, arrangement or understanding in respect of a
security of the class of securities for which disclosure is
enhance the disclosure in the early warning report by requiring
more detailed information regarding the intentions of the acquiror
and the purpose of the transaction;
require the early warning report to be certified and
require the news release to be issued and filed no later than
the opening of trading on the next business day (rather than simply
streamline the information required in a news release.
1 Except in Ontario, where the amendments will come into
force on the later of (a) May 9, 2016, and (b) the day on which
certain sections of Schedule 18 of the Budget Measures Act,
2015 (Ontario) are proclaimed in force.
2 This exemption is designed to exclude the ordinary course
activities of short-sellers who borrow securities for commercial or
investment purposes and not with a view of influencing voting or
intending to vote the borrowed securities.
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.
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