ICD Submits Comment to CSA Regarding Proposed Changes to Shareholder Rights Plans

Jun 12, 2013
The Institute of Corporate Directors (the “ICD”) today announced that it has submitted comment letters to the Canadian Securities Administrators (“CSA”) on its proposed new rules relating to shareholder rights plans, the early warning system and empty voting, and to the Autorité des marchés financiers (“AMF”) in Quebec regarding its consultation paper on securities regulators’ intervention in defensive tactics.

“We commend the efforts of the CSA and AMF to tackle these important policy issues and we welcome the chance to participate in a discussion of the optimal policy solutions,” said ICD President and CEO, Stan Magidson. “We particularly support the current AMF proposal, which takes a holistic approach to assessing the shareholder rights plan and defensive tactics regime in Canada, and will best enable directors to exercise their business judgement in change of control transactions with the best interests of the corporation in mind.” 

In its letters, the ICD recommends in favour of:

  • Adopting the AMF Proposal as the ultimate national instrument in this area;
  • Forming a Task Force comprising appropriate members to advance the AMF Proposal nationally and to make it best of class globally; and
  • Adopting the CSA Early Warning Draft Amendments, which include lowering the early warning reporting threshold from 10% to 5%, to put Canada in line with major capital market jurisdictions such as the United States, Australia, Japan and Hong Kong, and enhancing the scope of investor disclosure obligations to provide greater transparency about significant holdings of an issuer’s securities.

On March 13, 2013, the CSA published, for comment, proposed amendments and 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. On March 14, 2013, the CSA issued an invitation to comment on the proposed National Instrument 62-105 Security Holder Rights Plans, which would establish a comprehensive regulatory framework for the treatment of rights plans in Canada.

The AMF consultation paper regarding defensive tactics, titled “An Alternative Approach to Securities Regulators’ Intervention in Defensive Tactics,” was also issued on March 14, 2013.

Read the ICD's comment letter on the CSA Early Warning Draft Amendments
Read the ICD's comment letter on the CSA and AMF Proposed Rules on Shareholder Rights Plans and Defensive Tactics