Changes to the Takeover Bid Regime for Reporting Issuers
Effective February 1, 2008, a series of changes was made to what may be generally called the takeover bid regime in Canada (the “Bid Regime”). The revised Bid Regime comprises the following statutes, policies and instruments:
1. Multilateral Instrument 62-104 – Takeover Bids and Issuer Bids (“MI 62-104”) governs takeover bids and issuer bids in all jurisdictions of Canada except Ontario.
2. Part XX of the Securities Act (Ontario) (the “Act”) and Ontario Securities Commission (“OSC”) Rule 62-504 – Takeover Bids and Issuer Bids (“OSC Rule 62-504”) governs takeover bids and issuer bids in Ontario only.
In addition, National Policy 62-203 – Takeover Bids and Issuer Bids provides a general outline of the manner in which provincial and territory securities regulatory authorities interpret or apply certain provisions of the Bid Regime and provides guidance on the conduct of parties involved in a bid.
In all jurisdictions the new rules were accompanied by legislative amendments that removed detailed bid provisions from statutes and substituted general platform provisions to enable regulators to harmonize, streamline and update bid requirements under National Instrument 62-104. In Ontario, OSC Rule 62-504 seeks to achieve the same harmonization and modernization through amendments to Part XX – Takeover Bids and Issuer Bids (the “Revised Part XX”) of the Act and by adoption of OSC Rule 62-504.
In short, the Bid Regime described above governs takeover bids and issuer bids in Canada after February 1, 2008. Reporting issuers in multiple jurisdictions will have to ensure that they comply with the Revised Part XX, OSC Rule 62-504 and MI 62-104 to ensure compliance with the entire Bid Regime.
In conjunction with the introduction of the revised Bid Regime described above, the AMF in Quebec and the OSC are also promulgating Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions (“MI 61-101”). The requirements of MI 61-101 are substantially similar to those currently set out in Regulation Q-27 respecting protection of minority security holders in the course of certain transactions in Quebec (“Regulation Q-27”) and in Rule 61-501 – Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions (“Rule 61-501”) in Ontario, both of which were repealed on the introduction of MI 61-101.
Although, as noted previously, MI 61-101 is substantially similar to Rule 61-501, a number of changes have been made in the instrument. The majority of these changes are consequential changes as a result of the proposed amendments to the Quebec Security Act, the Act, MI 62-104 and OSC Rule 62-504. The effective date of MI 61-101 was also February 1, 2008, coinciding with the coming into force of the amendments to the Quebec Security Act and the Act described previously and with the adoption and coming into force of MI 62-104 and OSC Rule 62-504.
All takeover bids, issuer bids and related party transactions involving reporting issuers should be carefully reviewed in light of the revised Bid Regime and the new Multilateral Instrument 61-101. Your lawyer can help you with that.
This article was originally published in the April 29, 2007 edition of the Ottawa Business Journal.