Important amendments to Canadian take-over bid regime

The Canadian Securities Administrators (CSA) have published significant amendments to the Canadian take-over bid regime (the Amendments). The Amendments are an initiative of all CSA members and are intended to strike a fair balance between the interests of bidders, target boards of directors and security holders of target companies. The Amendments will come into force on May 9, 2016; however, legislative amendments in Ontario are necessary.

While the Amendments do not recognize a target board’s right to “just say no” to and block a hostile bid, they will provide boards of directors of target companies with additional time to respond to such bids and shareholders with the ability to make “voluntary, informed and coordinated” decisions as to whether to tender their securities to the bid.

The key provisions of the Amendments to the Canadian take-over bid regime will, upon coming into effect, require that:

• “non-exempt bids” remain open for at least 105 days (down from the original proposal of 120 days), subject to certain exceptions;
• all non-exempt bids contain a 50%+1 minimum tender condition, which cannot be lowered or waived;
• all non-exempt bids be extended for a minimum 10-day period once the minimum tender condition has been satisfied and all other conditions have been satisfied or waived, and
• partial bids also be subject to the 50%+1 mandatory minimum tender condition and that tendered shares be taken up pro rata.

We are preparing a more detailed analysis of these amendments – another update will follow.