On August 25, 2015, the participating provinces and territory in the Cooperative Capital Markets Regulatory System achieved an important milestone towards implementation of the system by publishing a revised consultation draft of the uniform provincial and territorial capital markets act (now known as the Capital Markets Act), along with the drafts of the initial regulations proposed for adoption by the participating provinces and territory under the draft uniform act. These materials have been published for a 120-day public comment period.
This article is part of Gowlings' Guide to the Proposed Initial Regulations and related materials. In this segment of our guide, we discuss the proposed initial regulations on take-over bids and special transactions. You can view other sections of the guide here.
The Uniform Act
Part 8 of the draft uniform act (Take-Over Bids and Issuer Bids) sets out the fundamental principles underlying the regulation of take-over bids and issuer bids. It includes more provisions than have been typically included in the provincial securities acts (other than the Ontario Securities Act). However, the details of the regime underlying these principles will be included in the regulations under the draft uniform act.
National and Multilateral Instruments and Policies
In order to maintain continuity and minimize disruption for market participants, the proposed initial regulations are derived principally from the existing "6-series" national and multilateral instruments and policies(1) in their current forms as of March 2, 2015. Generally, the changes that have been proposed are those necessary:
- to fit the "6-series" as regulations under the draft uniform act;
- to eliminate differences in requirements across the participating provinces and territories; and
- to reflect the integration of the regulatory authorities in the participating provinces and territories into the system.
The proposed revisions are not intended to affect the application of the existing "6-series" in the non-participating jurisdictions.
(a) Take-Over Bids and Issuer Bids
One area that will see a regulatory change in Ontario (to bring it into line with the other jurisdictions) is the application of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids. In all provinces other than Ontario, the detailed take-over bid and issuer bid requirements are set out in Multilateral Instrument 62-104 instead of the provincial securities acts. However, in Ontario most of the requirements are set out in Part XX of the Ontario Securities Act with additional provisions in OSC Rule 62-504 Take-Over Bids and Issuer Bids. To ensure a harmonized take-over bid regime, the participating provinces and territories are proposing to carry forward Multilateral Instrument 62-104 in all of their jurisdictions (including Ontario). We note however that the version of Multilateral Instrument 62-104 currently proposed for adoption is the version in force as of March 2, 2015, and so it does not include the proposed amendments published for comment by the Canadian Securities Administrators in late March 2015.
(b) Protection of Minority Security Holders in Special Transactions
One area that will see a regulatory change in the participating provinces and territories other than Ontario (to bring them into line with Ontario and Québec) is the application of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions which imposes additional disclosure, valuation and security holder approval requirements in connection with certain types of transactions. For more information, see our segment on Protection of Minority Security Holders in Special Transactions.
The participating provinces and territories have not proposed any new regulations relating to take-over bids and special transactions that would apply only to these jurisdictions. OSC Rule 62-504 is not being carried forward under the draft uniform act.
If you would like to discuss these regulations and how they will apply to your business, or if you wish to be added to our email distribution list for related publications, please contact Tal Cyngiser* or any of the following lawyers:
*Tal Cyngiser, an Associate in our Toronto office, was seconded to the Canadian Securities Transition Office (CSTO) for over a year, working extensively with the participating provinces and their securities commissions on the drafts of the initial regulations.
To view our full guide, click here.
(1) The "6-series" includes one national instrument and two national policies:
NI 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues
NP 62-202 Take-Over Bids – Defensive Tactics
NP 62-203 Take-Over Bids and Issuer Bids