Canadian Securities Administrators Propose Significant Amendments To The Issuer Bid, Take-over Bid And Beneficial Ownership Reporting Regimes

On May 14, 2026, the Canadian Securities Administrators (CSA) published a wide-ranging package of proposed amendments and changes to the Canadian issuer bid, take-over bid and beneficial ownership reporting regimes (collectively, the Proposed Amendments) for a 90-day comment period. The Proposed Amendments would, among other things:

• introduce a new selective repurchase exemption from the issuer bid requirements
• enhance disclosure of equity equivalent derivatives in the context of take-over bids and contested proxy solicitations
• refine the early warning reporting triggers and thresholds, and
• codify a number of commonly granted discretionary exemptions.

The comment period closes on August 12, 2026.

The Proposed Amendments are relevant to public companies, private companies, institutional investors and parties engaged in take-over bids.

The Proposed Amendments would amend, principally, National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104), National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (NI 62-103) and National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), together with related companion policy changes and consequential amendments to a number of other instruments.

Background

The CSA's review responds to a number of recurring market developments, including increased stakeholder interest in selective issuer repurchases, the continued use of cash settled equity total return swaps and similar derivative instruments in the context of contested transactions, divergent interpretations of certain early warning triggers and thresholds (including those considered in Re NorthWest Copper Corp, 2023 BCSECCOM 602 (Northwest) and Kingsway Financial Services Inc v. Kobex Capital Corp, 2016 BCSC 460), and the steady flow of discretionary exemptive relief in respect of modified Dutch auction issuer bids, proportionate tenders, and the non-reporting issuer bid exemptions. The CSA describe the package as intended to enhance the competitiveness of Canadian capital markets, reduce regulatory burden, and improve the integrity and transparency of the issuer bid, take-over bid and early warning reporting regimes.

New selective repurchase exemption

Subject to a limited list of exceptions, an offer by an issuer to acquire or redeem its own securities currently constitutes an “issuer bid” under NI 62-104. Unlike the take-over bid regime, which permits offerors to acquire securities from a limited number of sellers under section 4.2 of NI 62-104, there is at present no “private agreement” exemption from the issuer bid requirements. The CSA notes that this restriction has been criticized as compromising Canadian competitiveness, particularly given that selective repurchases are generally permissible in the United States, and that it can contribute to a market overhang where blockholders are unable to find an exit other than open-market dispositions.

Proposed new section 4.6.1 of NI 62-104 would create a new selective repurchase exemption (SRE) that permits an issuer to repurchase securities of its own issue without formal issuer bid compliance, subject to the following key conditions:

• Repurchase limit. Acquisitions in reliance on the exemption may not exceed 5% of the securities of the class outstanding at the beginning of any 12-month period.
• Counterparty and transaction limits. Repurchases may be made from no more than five persons in the aggregate and in no more than five transactions in the aggregate within a 12-month period.
• Liquid market. A liquid market in the class of securities must exist at the date of the bid, determined in accordance with proposed new section 1.12 of NI 62-104 (which is derived from section 1.2 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions). The CSA estimates that approximately 75% of TSX-listed issuers and less than 10% of TSX Venture Exchange-listed issuers would satisfy the liquid market criteria.
• Discount to closing price. The consideration paid (inclusive of brokerage fees) must be less than the closing price of the class on the principal market at the date of the bid, and the bid must be made outside of regular trading hours.
• Board determination. The issuer’s board of directors must determine that, following completion of the bid, the market for the class would not reasonably be expected to be materially less liquid, and that the bid would not reasonably be expected to have a significant negative effect on the market price or value of the class.
• No undisclosed material information. Neither the issuer nor, to the issuer’s knowledge after reasonable inquiry, the selling securityholder may have knowledge of an undisclosed material fact or material change.
• Post-trade disclosure. The issuer must issue and file a news release before the opening of trading on the principal market disclosing the name of the selling securityholder, the number and price of the securities acquired, the market price at the date of the bid, and the aggregate number of securities acquired in reliance on the exemption in the preceding 12 months.

The CSA confirms that securities acquired in reliance on the SRE are not intended to reduce the maximum number of securities an issuer may acquire under the normal course issuer bid (NCIB) exemption in section 4.8 of NI 62-104, and the CSA indicates that it will engage with the designated exchanges regarding corresponding amendments to their rules. In the aggregate, an issuer could therefore potentially repurchase up to 20% of a class within a 12-month period by combining the SRE, the employee/officer/director/consultant exemption in section 4.7 of NI 62-104 and the NCIB exemption.

Enhanced disclosure of equity equivalent derivatives

The CSA has elected not to require aggregation of beneficial ownership and economic interests for the purposes of triggering the 10% early warning threshold, citing the absence of clear evidence of misuse, the compliance burden such an approach would impose, and the calibration of the U.S. Securities and Exchange Commission’s 2023 amendments to its beneficial ownership reporting regime. The CSA has instead proposed targeted disclosure obligations that engage only when there is a formal, public overture for control.

A new defined term “equity equivalent derivative” would be introduced to capture one or more derivatives referenced to or derived from a voting or equity security of an issuer that, alone or in combination, provide economic exposure substantially equivalent to beneficial ownership. The CSA proposes guidance in new section 3.1 of National Policy 62-203 indicating that a rate of return between 90% and 110% of the reference security would generally be considered substantially equivalent. A cash settled equity total return swap or substantially similar derivative would fall within the definition.

Bidder-side disclosure

• Take-over bid circular disclosure. New Item 8.1 of Form 62-104F1 would require disclosure of any interest in (or right or obligation associated with) a related financial instrument involving voting or equity securities of the offeree issuer, including any equity equivalent derivative, and any agreement, arrangement or understanding that has the effect of altering economic exposure to the offeree issuer, in each case during the six-month period preceding the date of the take-over bid.
• Disclosure during the bid. New section 2.7.1 of NI 62-104 would require an offeror to issue and file a news release before the opening of trading on the next business day following any acquisition, disposition, change, entry into, termination or amendment of such a related financial instrument or arrangement during the pendency of the bid.
• Counterparty relationships. Both the circular and the news release would have to describe any past or present relationship between the offeror or any joint actor and a counterparty (or affiliate of a counterparty) that, to a reasonable person, could be perceived to affect that counterparty’s decision to acquire, dispose of or vote securities of the offeree issuer, or affirmatively state that no such relationship exists.

Soliciting securityholder disclosure

• Deemed control or direction. New subsection 5.1(6) of NI 62-104 would, during the pendency of a proxy solicitation, deem an acquiror that is a counterparty to an equity equivalent derivative to have acquired and to have control or direction over the reference security for purposes of sections 5.2 and 5.4 of NI 62-104. The result is that movements in a soliciting securityholder’s aggregate economic position, whether through securities or derivatives, would trigger early warning reporting once the aggregate position is equivalent to a 10% or greater beneficial ownership position.
• Information circular disclosure. New Items 6.6, 6.7 and 6.8 of Form 51-102F5 would apply to solicitations made other than by or on behalf of management, requiring prescribed disclosure of (i) beneficial ownership of, or control or direction over, voting securities, (ii) related financial instruments (including equity equivalent derivatives), and (iii) other arrangements affecting economic exposure to the company.
• Public broadcast exemption. Amendments to subsection 9.2(4) of NI 51-102 would extend a more limited beneficial ownership disclosure obligation to persons soliciting proxies in reliance on the public broadcast, speech or publication exemption.

The CSA also proposes guidance affirming that the disclosure or use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage the CSA’s public interest jurisdiction. The guidance identifies, among other situations, public disclosures that conflate beneficial ownership with economic interests, and the deliberate accumulation of substantial economic positions accompanied by communications to a counterparty regarding commercial incentives or disincentives tied to its handling of the reference securities.

Disclosure and timing of acquirors’ plans or future intentions

Citing concerns about boilerplate disclosure in early warning reports (EWRs) and the market practice of updating EWRs only upon execution of a definitive agreement, the CSA has proposed new guidance in section 3.3 of NP 62-203 clarifying that:

• an acquiror should reassess the accuracy of its most recent EWR disclosure regarding plans or future intentions each time it becomes subject to a further EWR filing obligation;
• although a change in plans or future intentions will generally occur at the latest upon execution of a definitive agreement, commencement of a take-over bid or public announcement of a proxy solicitation, an acquiror should update its disclosure as soon as a change actually occurs or where it has taken irrevocable steps toward a potential transaction, even where its existing disclosure contains general reservations; and
• significant steps by an acquiror or joint actor with respect to a particular transaction or event may, individually or together, constitute a change in plans or future intentions.

Early warning reporting triggers, thresholds and calculations

The Proposed Amendments include a number of targeted technical changes to the early warning system, including:

• New reporting issuers. Securities held at the time that an issuer becomes a reporting issuer will be deemed to have been acquired at that time, requiring a 10%+ holder to file an EWR. However, such holders will be relieved from related news release and moratorium provisions. See new subsection 5.1(3), 5.2(5) and 5.3(3) of NI 62-104.
• Joint actor relationships. A person will be deemed to have acquired (or disposed of) securities of other joint actors upon the commencement (or cessation) of acting jointly or in concert, addressing the gap identified in Northwest. The deeming would apply only for purposes of Part 5 of NI 62-104; the formation of a joint actor relationship would not, in and of itself, constitute a take-over bid. See new subsections 5.1(4) and 5.1(5) of NI 62-104.
• Subsequent EWR trigger. A new defined term “securityholding percentage” is introduced to confirm that subsequent EWRs are triggered by a 2% or greater change in the acquiror’s post-event ownership percentage, measured against the most recently reported percentage. See amended paragraph 5.2(2)(a) of NI 62-104.
• Alternative monthly reporting thresholds. Eligible institutional investors filing under the alternative monthly reporting (AMR) system are confirmed to be required to report on crossing fixed 2.5% thresholds in excess of 10% (e.g. 12.5%, 15%, 17.5%). See amended paragraph 4.5(c) of NI 62-103 and new section 3.8 of NP 62-203.
• Re-entry into the AMR system. An eligible institutional investor that is not filing under the AMR system will be permitted to enter or re-enter the AMR system upon issuing a news release and filing a report under paragraph 4.5(a). See new subsection 4.3(5) of NI 62-103.
• Threshold calculations. Clarification, with illustrative examples, is provided for the treatment of convertible securities that are not exercisable within 60 days, and it is confirmed that beneficial ownership may be calculated on a fully diluted basis in limited circumstances such as subscription receipt offerings or fully backstopped rights offerings. See new sections 3.6 and 3.7 of NP 62-203.

Amending exemptions and codifying common discretionary relief

Removal of the 5% market purchase exemption

Subsections 2.2(3) and 2.2(4) of NI 62-104, which currently permit offerors to make market purchases of up to 5% of the outstanding securities of a class subject to a take-over bid during the bid, would be repealed. The CSA notes that, following the 2016 amendments introducing the 50% minimum tender requirement (which excludes securities held by the bidder and joint actors), the exemption is of limited utility in satisfying the tender condition and could be deployed tactically to constrain a competing bid. The CSA identified only one instance of disclosed reliance on this exemption between January 1, 2021 and December 31, 2023.

Non-reporting issuer exemptions

Sections 4.3 and 4.9 of NI 62-104 would be amended to expand the categories of persons excluded from the 50-securityholder calculation under each of the non-reporting issuer take-over bid and issuer bid exemptions to include officers, directors and consultants of the target/issuer and its affiliates, certain former employees, officers, directors and consultants, and spouses of any of the foregoing where the relevant person has control or direction over the spouse’s securities. The amendments codify positions previously taken in discretionary exemptive relief.

Modified Dutch auction issuer bids

New subsection 2.32(4.1) of NI 62-104 would codify discretionary relief from the requirement to take up all deposited securities before extending an issuer bid, accommodating the mechanics of modified Dutch auction issuer bids. The exemption would not be available where the bid is not undersubscribed or where the market price exceeds the highest price within the range offered.

Proportionate tenders

New subsection 2.26(3.1) of NI 62-104 would codify discretionary relief from the proportionate take up and payment requirement in respect of issuer bids that permit securityholders to elect to sell a number of securities sufficient to maintain their pro rata ownership following completion of the bid. The exemption would be available for issuer bids generally, and not only for those conducted as modified Dutch auctions.

Acquisition of convertible securities during an issuer bid

Subsection 2.3(2) of NI 62-104 would be amended to permit an issuer conducting an issuer bid to also acquire, redeem or otherwise purchase securities that are convertible into securities of the class subject to the bid, in reliance on the exemptions in paragraphs 4.6(a), (b) or (c) of NI 62-104.

Settlement timing and other guidance

Following the move to T+1 settlement on May 27, 2024, the Proposed Amendments would replace the existing requirement to pay tendering securityholders within three business days after take-up with a general obligation to pay “promptly,” supported by new guidance in section 2.19 of NP 62-203. The CSA has specifically requested comment on whether the maximum tendering process payment period should be reduced from three business days to one business day to align fully with the T+1 settlement cycle.

Additional policy guidance is proposed in NP 62-203 regarding (i) take-over bid conditions that may engage the CSA’s public interest jurisdiction, including conditions granting an offeror unqualified discretion or that require the target to take actions for the bidder’s benefit; (ii) the application of certain take-over bid principles in the context of mini-tender offers; (iii) the determination of the “date of the bid” for purposes of certain exemptions, including in the context of call and put options; (iv) the CSA’s public interest jurisdiction over selective offshore repurchases; and (v) the application of the joint actor concept to proxy solicitations in respect of alternative slates of directors, even in the absence of a take-over bid or issuer bid.

Consequential and local amendments

The title of NI 62-104 would be amended to Take-Over Bids, Issuer Bids and the Early Warning System, with conforming amendments to Multilateral Instrument 13-102 System Fees, National Instrument 43-101 Standards of Disclosure for Mineral Projects, National Instrument 44-102 Shelf Distributions, Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets, Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, and to Companion Policy 55-104CP and Companion Policy 61-101CP. The Ontario Securities Commission also proposes corresponding amendments to OSC Rule 48-501, OSC Rule 71-801 and OSC Rule 71-802.

Key takeaways

If and when the Proposed Amendments come into effect:

• Reporting issuers should consider whether the new selective repurchase exemption may offer a useful additional tool, particularly where a significant securityholder is seeking liquidity and the issuer’s class meets the liquid market criteria. Boards should be prepared to make the prescribed determinations regarding the post-bid liquidity and market impact of any selective repurchase, placing appropriate reliance on financial advice. Audit committees may wish to update their charters to make it clear that the audit committee is empowered to make the liquid market determination.
• Bidders and activist investors should review their use of cash settled equity total return swaps, contracts for difference and similar instruments in light of the proposed six-month look-back and “during the bid” disclosure obligations, the new soliciting securityholder deeming provision, and the proposed public interest guidance regarding abusive use of equity equivalent derivatives. The proposed requirement to identify counterparties (and their affiliates) and to describe historical relationships will likely require careful diligence and may affect dealer selection in connection with derivative trading strategies.
• Eligible institutional investors should review their early warning and AMR compliance frameworks, particularly in light of the fixed 2.5% threshold clarification, the new re-entry mechanism for the AMR system, and the proposed guidance regarding the issuer actions exemption and the interaction between section 4.1 of NI 62-103 and section 5.4 of NI 62-104.
• Acquirors with significant blocks should anticipate increased CSA scrutiny of boilerplate disclosure regarding “plans or future intentions” in EWRs and should review their internal procedures for re-assessing such disclosure when subsequent filing obligations arise.
• Private companies at or near the 50-securityholder threshold should consider whether the expanded categories under the non-reporting issuer exemptions (officers, directors, consultants, certain former service providers and spouses) should be reflected in their tracking of compliance with the threshold.

Comment period and next steps

The comment period for the Proposed Amendments closes on August 12, 2026. The CSA has invited comment on 22 specific questions, including the appropriateness of the 5%, five-person and five-transaction limits and the liquid market criteria for the selective repurchase exemption; the appropriate scope of the proposed equity equivalent derivative disclosure regime; the new EWR deeming provisions; and whether the tendering process payment period should be further shortened to one business day. Comments may be submitted through the CSA consultation portal at securities-administrators.ca/consultations.