Securities Regulators Propose a 5% Threshold for Early Warning Reports and Increased Disclosure

The Canadian Securities Administrators have issued a Notice and Request for Comment regarding proposed changes to: Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids, National Policy 62-203 Take-Over Bids and Issuer Bids, and National Instrument 62-103 Early Warning System and Related Take-Over Bid and Insider Reporting Issues.

The most significant changes proposed are:

1.  Changes to early warning reporting thresholds
    • A decrease of the early warning reporting threshold from 10% to 5%;
    • A reporting requirement for 2% decreases in ownership and decreases in ownership below the 5% threshold (currently only 2% increases in ownership must be reported); and
    • An exemption from the requirement to report decreases in ownership of securities lent-out using specified securities lending arrangements.
2.  Enhanced disclosure
    • Early warning reports will have to include detailed disclosure of the intentions of the person acquiring securities, as well as the purpose of the acquisition.
3.  New standards for calculating ownership
    • Investors will be deemed to own underlying securities for the purposes of calculating percentage of security ownership, including all “equity equivalent derivative” positions, which provide the holder with both a degree of control over, and a stake in the value of, the underlying securities, which is similar to the security ownership.


For more information, please contact any member of the Boughton Law Securities Group.

The information contained in this post is a summary only and is not considered to be legal advice.


Tags: Article; Securities