ICD Supports Proposed Changes to Canada’s Take-Over Bid Regime but Advises Future Reassessment

Jun 29, 2015
The Institute of Corporate Directors (ICD) today offered its support for the CSA’s unified approach to amending regulations governing take-over bids in Canada, but argued that future reassessment will be important to ensure that target boards have sufficient latitude to respond to unsolicited bids.
Canada's national association representing directors and boards also argued that one of the key proposals, a 120 day bid period, is the minimum amount of time a board should have to consider an unsolicited bid.
“The provisions outlined offer a reasonable approach in the circumstances,” said Stan Magidson, President and CEO of the ICD. “However, because directors are the only individuals legally mandated to act in the best interests of the corporation, it is important that any current or future changes to our regulatory framework give boards as much flexibility as possible to respond to unsolicited bids.”
The ICD outlined its views in a comment letter submitted today to the Canadian Securities Administrators (CSA) regarding proposed amendments to Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and changes to National Policy 62-203 Take-Over Bids and Issuer Bids, including its support for:
  • The minimum 120-day bid period to provide directors of target issuers more time to respond to a take-over bid;
  • A 50% minimum tender requirement to give shareholders the information and knowledge that a bid will only succeed with the support of a majority of shareholders independent of the bidder;
  • A 10-day extension to bids after the minimum tender requirement is met to provide undecided shareholders more time to decide whether to accept the bid.
“We welcome the scrutiny our regulators are giving to Canada’s take-over bid regime, not least because our country has become a highly bidder-friendly jurisdiction,” said Mr. Magidson. “While we support the unified CSA proposals and urge their adoption, we believe they must be reassessed in the future to ensure they are providing boards with sufficient latitude to deal with bids in the best interests of the corporation, its shareholders and other stakeholders.”