Ontario Securities Commission Bulletin
Issue 49/19 - May 14, 2026
Ont. Sec. Bull. Issue 49/19
• Ontario Securities Commission et al.
• Ontario Securities Commission et al.
• Ontario Securities Commission et al.
• Ontario Securities Commission et al.
• Ontario Securities Commission et al.
• Ontario Securities Commission et al. -- ss. 127(1), 127.1
• Temporary, Permanent & Rescinding Issuer Cease Trading Orders
• Temporary, Permanent & Rescinding Management Cease Trading Orders
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FOR IMMEDIATE RELEASE
May 6, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 6, 2026 is available at capitalmarketstribunal.ca.
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Ontario Securities Commission et al.
FOR IMMEDIATE RELEASE
May 7, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 7, 2026, is available at capitalmarketstribunal.ca.
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FOR IMMEDIATE RELEASE
May 8, 2026
TORONTO -- A hearing in the above-named matter is scheduled to be heard on May 8, 2026 at 5:00 p.m. by videoconference.
Members of the public may observe the hearing by videoconference, by selecting the "View by Zoom" link on the Tribunal's hearing schedule, at capitalmarketstribunal.ca/en/hearing-schedule.
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Ontario Securities Commission et al.
FOR IMMEDIATE RELEASE
May 8, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 8, 2026 is available at capitalmarketstribunal.ca.
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Ontario Securities Commission et al.
FOR IMMEDIATE RELEASE
May 8, 2026
TORONTO -- Following a hearing held today, the Tribunal issued an Order in the above- named matter approving the Settlement Agreements reached between the Ontario Securities Commission and the respondents, Stan Bharti and Neil Said.
A copy of the Order dated May 8, 2026, Settlement Agreement dated April 10, 2026 between the Ontario Securities Commission and Stan Bharti, Settlement Agreement dated April 10, 2026 between the Ontario Securities Commission and Neid Said and Oral Reasons for Approval of the Settlements dated May 8, 2026, are available at capitalmarketstribunal.ca.
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Ontario Securities Commission and Nayeem Alli
FOR IMMEDIATE RELEASE
May 8, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 8, 2026 is available at capitalmarketstribunal.ca.
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FOR IMMEDIATE RELEASE
May 11, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 11, 2026 is available at capitalmarketstribunal.ca.
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FOR IMMEDIATE RELEASE
May 11, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 11, 2026 is available at capitalmarketstribunal.ca.
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FOR IMMEDIATE RELEASE
May 11, 2026
TORONTO -- The Tribunal issued an Order in the above-named matter.
A copy of the Order dated May 11, 2026 is available at capitalmarketstribunal.ca.
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BETWEEN:
File No. 2025-11
Adjudicators: |
Andrea Burke (chair of the panel) |
Jane Waechter |
|
Dale Ponder |
May 6, 2026
WHEREAS the Capital Markets Tribunal held a hearing in writing to consider a request from Jack Marks to extend the deadline for him to file materials;
ON READING the correspondence of Jack Marks;
IT IS ORDERED that:
1. by 9:00 a.m. EDT on May 7, 2026, Jack Marks shall serve and file the Leave Motion, Marks New Evidence Motion, and Marks Discovery Motion and related motion record(s) and written submissions;
2. by 9:00 a.m. EDT on May 8, 2026, CNSX Markets Inc. and the Ontario Securities Commission shall each serve and file any responding materials (including motion record(s) and written submissions) relating to the Leave Motion, Marks New Evidence Motion, and Marks Discovery Motion; and
3. at the hearing on May 8, 2026, the panel will hear oral reply submissions, if any, from Jack Marks.
Ontario Securities Commission et al.
BETWEEN:
File No. 2026-16
Adjudicator: |
M. Cecilia Williams |
May 7, 2026
WHEREAS on May 7, 2026, the Capital Markets Tribunal held a hearing by videoconference;
ON HEARING the submissions of the representatives for each of the Ontario Securities Commission, SponsorsOne Brands Inc., Gary Bartholomew and Myles Batholomew, and WestCan Energy Ltd. and John Cameron Cunningham;
IT IS ORDERED THAT:
1. by 4:30 p.m. on June 5, 2026, the Commission shall disclose to the respondents the non-privileged, relevant documents and things in the Commission's possession or control;
2. by 4:30 p.m. on July 3, 2026, the respondents shall serve and file a motion, if any, regarding the Commission's disclosure or seeking disclosure of additional documents;
3. by 4:30 p.m. on August 20, 2026, the Commission shall:
a. serve and file a witness list,
b. serve a summary of each witness's expected testimony, and
c. indicate any intention to call an expert witness, including providing the expert's name and the issues on which the expert will be testifying; and
4. a further case management hearing in this matter is scheduled for August 27, 2026, at 10:00 a.m. by videoconference, or as may be agreed to by the parties and set by the Registrar.
Ontario Securities Commission et al.
BETWEEN:
File No. 2026-24
Adjudicator: |
Geoffrey D. Creighton |
May 8, 2026
WHEREAS on May 8, 2026, the Capital Markets Tribunal held a hearing by videoconference;
ON HEARING the submissions of the representatives for each of the Ontario Securities Commission, Emerita Resources Corp., David Patrick Gower, Michael Lawrence Guy, Sergio Damian Lopez, Gregory Francis Duras, Hélio Botelho Diniz, and Joaquin Merino-Marquez;
IT IS ORDERED THAT:
1. by 4:30 p.m. on June 8, 2026, the Commission shall disclose to the respondents the non-privileged, relevant documents and things in the Commission's possession or control;
2. by 4:30 p.m. on August 31, 2026, the respondents shall serve and file a motion, if any, regarding the Commission's disclosure or seeking disclosure of additional documents;
3. by 4:30 p.m. on September 2, 2026, the Commission shall:
a. serve and file a witness list,
b. serve a summary of each witness's expected testimony, and
c. indicate any intention to call an expert witness, including providing the expert's name and the issues on which the expert will be testifying; and
4. a further case management hearing in this matter is scheduled for September 10, 2026, at 10:00 a.m. by videoconference, or as may be agreed to by the parties and set by the Registrar.
Ontario Securities Commission et al. -- ss. 127(1), 127.1
BETWEEN:
File No. 2026-26
Adjudicators: |
M. Cecilia Williams (chair of the panel) |
Cathy Singer |
|
Alan Stewart |
May 8, 2026
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)
WHEREAS on May 8, 2026, the Capital Markets Tribunal held a hearing by videoconference to consider the joint request for a settlement hearing filed by the Ontario Securities Commission and Stan Bharti and Neil Said for approval of settlement agreements dated April 10, 2026 (the Settlement Agreements);
ON READING the joint request for a settlement hearing, the Application for Enforcement Proceeding dated April 10, 2026, the Settlement Agreements and the written submissions of the Commission, on hearing the submissions of representatives for the Commission and the respondents, and on being advised by the Commission that it has received payments of all amounts in accordance with the terms of the Settlement Agreements;
IT IS ORDERED THAT:
1. the Settlement Agreements are approved;
2. with respect to Bharti:
a. pursuant to paragraphs 7 and 8.1 of s. 127(1) of the Securities Act (the Act), within 45 days from the date of this order, Bharti shall resign from any positions he holds as a director or officer of an issuer or registrant, except for 2051580 Ontario Inc., 2437357 Ontario Inc., or 2860485 Ontario Inc., (the Numbered Companies) provided that (i) Bharti, his spouse, the Bharti Investment Trust or his children are the only shareholders of the Numbered Companies, and (ii) only Bharti's spouse or his children are permitted to become, serve or act as the other directors or officers of the Numbered Companies for as long as Bharti remains a director or officer;
b. pursuant to paragraphs 8 and 8.2 of s. 127(1) of the Act, as of 45 days from the date of this order, Bharti is permanently prohibited from becoming or acting as a director or officer of any issuer or registrant, except for the Numbered Companies provided that (i) Bharti, his spouse, the Bharti Investment Trust or his children are the only shareholders of the Numbered Companies, and (ii) only Bharti's spouse or his children are permitted to become, serve or act as the other directors or officers of the Numbered Companies for as long as Bharti remains a director or officer;
c. pursuant to paragraph 8.5 of s. 127(1) of the Act, Bharti is permanently prohibited from becoming or acting as a registrant or promoter;
d. pursuant to paragraph 9 of s. 127(1) of the Act, Bharti shall pay to the Commission an administrative penalty of $785,000;
e. pursuant to paragraph 10 of s. 127(1) of the Act, Bharti shall disgorge to the Commission $915,000; and
f. pursuant to s. 127.1 of the Act, Bharti shall pay $50,000 to the Commission for costs of the investigation and hearing; and
3. with respect to Said:
a. pursuant to paragraphs 7 and 8.1 of s. 127(1) of the Act, Said shall resign from any positions he holds as a director or officer of an issuer or registrant, except that Said may continue as a director or officer of Neil Said Professional Corp., a non-reporting Ontario issuer through which he provides legal and consulting services, provided that none of the securities of Neil Said Professional Corp. are owned by or offered for sale to anyone other than Said;
b. pursuant to paragraphs 8 and 8.2 of s. 127(1) of the Act, Said is prohibited from becoming or acting as a director or officer of any issuer or registrant for a period of 5 years, except for Neil Said Professional Corp. provided that none of the securities of Neil Said Professional Corp. are owned by or offered for sale to anyone other than Said;
c. pursuant to paragraph 8.5 of s. 127(1) of the Act, Said is prohibited from becoming or acting as a registrant or promoter for a period of 5 years;
d. pursuant to paragraph 9 of s. 127(1) of the Act, Said shall pay to the Commission an administrative penalty of $200,000;
e. pursuant to paragraph 10 of s. 127(1) of the Act, Said shall disgorge to the Commission $854,000; and
f. pursuant to s. 127.1 of the Act, Said shall pay $46,000 to the Commission for costs of the investigation and hearing.
BETWEEN:
1. The respondent, Stan Bharti, was a director and CEO of Medivolve, Inc. (Medivolve, or theCompany), an Ontario reporting issuer. On April 2, 2020, Medivolve publicly announced it was acquiring 40% of a company called Amino for US$2 million cash and 15 million common shares. However, Bharti and another Medivolve officer, Neil Said, arranged for 3 million of those 15 million Medivolve shares to be allocated to Bharti, and another 2.8 million of the 15 million shares to be allocated to Said. They did not ensure that Medivolve disclosed their receipt of shares or report the transaction as a related-party transaction in its financial disclosures made in April 2020, contrary to Ontario securities law.
2. Officers and directors of public companies have important gatekeeping roles in ensuring the public is provided with accurate information. Bharti is being held accountable for authorizing Medivolve's non-compliance with Ontario securities law.
3. The parties will jointly file a request that the Tribunal issue a Notice of Hearing (the Notice of Hearing) to announce that it will hold a hearing (the Settlement Hearing) to consider whether, pursuant to sections 127 and 127.1 of the Securities Act, RSO 1990, c S.5, as amended (the Act), it is in the public interest for the Tribunal to make certain orders against Bharti.
4. The Ontario Securities Commission (the Commission) and Bharti jointly recommend settlement of the proceeding (the Proceeding) against Bharti in accordance with the terms and conditions set out in this agreement (the Settlement Agreement). Bharti consents to the making of an order (the Order) substantially in the form attached as Schedule "A" to this Settlement Agreement based on the facts set out herein.
5. For the purposes of the Proceeding, and any other regulatory proceeding commenced by the Commission or another securities regulatory authority, Bharti agrees with the facts set out in Part III of this Settlement Agreement and the conclusions in Part IV and V of this Settlement Agreement.
6. Medivolve was incorporated under the laws of British Columbia in 2005.{1} At all material times, the Company's head office was in Toronto, and it was a publicly listed reporting issuer on the Canadian Securities Exchange (the CSE).{2} Medivolve's securities have been subject to a cease-trade order since September 2024.
7. Stan Bharti is an entrepreneur and businessman. He is the founder and executive chairman of Forbes & Manhattan Inc. (Forbes), an Ontario company. Bharti has decades of experience in Ontario's capital markets.
8. Medivolve retained Forbes in 2011 to provide consulting services. Through this consulting arrangement, Medivolve gained access to a range of legal, financial and other professionals who work with Bharti.
9. At all material times, Bharti was directly involved in decision making at Medivolve. He was Medivolve's CEO from March 14, 2019 to March 30, 2020, and was a Medivolve director from March 14, 2019 to April 29, 2020.
10. Said replaced Bharti as Medivolve's CEO from March 30, 2020 to April 29, 2020.
11. One of Bharti's contacts had co-founded a company called Exponential Genomics Inc. (Exponential). Exponential was researching new technology that could, if realized, potentially help speed up development of a COVID-19 therapeutic. Exponential was presented to Medivolve as an investment opportunity.
12. On April 3, 2020, Medivolve issued a news release that it would acquire 40% of a new Exponential subsidiary, Amino Therapeutics Inc. (Amino), for US$2 million cash and 15 million Medivolve common shares. The release did not disclose that Bharti would be receiving Medivolve shares as part of the transaction.
13. The transaction closed on April 13, 2020. However, only 5 million of the 15 million Medivolve shares were issued to Amino's owners. The remaining 10 million went to Bharti, Said, and others. Bharti received 3 million Medivolve shares valued at $0.305 per share, or $915,000, from the transaction through a holding company. He was Medivolve's CEO when the Amino transaction was negotiated and he approved the transaction as a Medivolve director. Bharti did not sell or otherwise dispose of the 3 million shares.
14. Not all of Medivolve's other directors were informed that Bharti would receive 3 million Medivolve shares from the Amino transaction before the board approved it. Additionally, Medivolve described Bharti's holding company as a "non-related person" in a Form 9 the company filed with the CSE seeking approval for the transaction.
15. Medivolve issued a news release on April 13, 2020 announcing that the Amino transaction had closed. The news release did not state that (i) Bharti had received 3 million Medivolve shares as part of the deal, or (ii) the deal was a related-party transaction.
16. Medivolve made its financial disclosures for the year ended December 31, 2019, including audited financial statements on April 24, 2020 and an amended MD&A on April 27, 2020. Medivolve did not disclose that Bharti received 3 million shares from the Amino transaction or report the deal as a related-party transaction.
17. Accordingly, Medivolve's financial disclosures for the year ended December 31, 2019 contained material misstatements, contrary to s. 122(1)(b) of the Act.
18. Bharti, as an officer and director of Medivolve, authorized Medivolve's non-compliance with Ontario securities law.
19. Bharti has accepted responsibility for his conduct, and he cooperated with the Commission's investigation.
20. By entering into this Settlement Agreement, Bharti has helped conserve Commission and Tribunal resources.
21. By engaging in the conduct described above, Bharti admits and acknowledges that,
(a) Medivolve made statements in its financial disclosures for 2019 that, in a material respect and at the time and in the light of the circumstances under which they were made, were misleading or untrue or failed to state a fact that was required or necessary to make the statement not misleading, contrary to s. 122(1)(b) of the Act; and
(b) Bharti authorized, permitted or acquiesced in Medivolve's non-compliance with Ontario securities law, contrary to s. 129.2 of the Act.
22. Bharti and the Commission agree to the terms of settlement set forth below.
23. Bharti consents to the Order substantially in the form attached as Schedule "A", pursuant to which it is ordered that:
(a) this Settlement Agreement is approved;
(b) within 45 days from the date of the Order, Bharti shall resign from any positions he holds as a director or officer of an issuer or registrant, pursuant to paragraphs 7 and 8.1 of s. 127(1) of the Act, except for 2051580 Ontario Inc, 2437357 Ontario Inc., or 2860485 Ontario Inc., (the Numbered Companies) provided that (i) Bharti, his spouse, the Bharti Investment Trust or his children are the only shareholders of the Numbered Companies, and (ii) only Bharti's spouse or his children are permitted to become, serve or act as the other directors or officers of the Numbered Companies for as long as Bharti remains a director or officer;
(c) Bharti is permanently prohibited from becoming or acting as a director or officer of any issuer or registrant, pursuant to paragraphs 8 and 8.2 of s. 127(1) of the Act, except for the Numbered Companies provided that (i) Bharti, his spouse, the Bharti Investment Trust or his children are the only shareholders of the Numbered Companies, and (ii) only Bharti's spouse or his children are permitted to become, serve or act as the other directors or officers of the Numbered Companies for as long as Bharti remains a director or officer;
(d) Bharti is permanently prohibited from becoming or acting as a registrant or promoter, pursuant to paragraph 8.5 of s. 127(1) of the Act;
(e) Bharti shall pay to the Commission an administrative penalty of $785,000, pursuant to paragraph 9 of s. 127(1) of the Act;
(f) Bharti shall disgorge to the Commission $915,000, pursuant to paragraph 10 of s. 127(1) of the Act; and
(g) Bharti shall pay to the Commission $50,000 for the costs of the investigation and proceeding, pursuant to s. 127.1 of the Act.
24. Bharti shall pay the amounts set out in subparagraphs 23(e), (f), and (g) by wire transfer to the Commission prior to the issuance of the Order.
25. Bharti acknowledges that this Settlement Agreement and the Order may form the basis for orders of parallel effect in other jurisdictions in Canada. The securities laws of some other Canadian jurisdictions allow orders made in this matter to take effect in those other jurisdictions automatically, without further notice. Bharti should contact the securities regulator of any other jurisdiction in which Bharti intends to engage in any securities or derivatives-related activities, prior to undertaking such activities.
26. If the Tribunal approves this Settlement Agreement, no enforcement proceedings will be continued against Bharti under Ontario securities law based on (i) the misconduct described in Part III of this Settlement Agreement or ii) any other transaction entered into by Medivolve prior to March 2, 2021, unless Bharti fails to comply with any term in this Settlement Agreement, in which case enforcement proceedings may be brought or continued under Ontario securities law against Bharti that may be based on, among other things, the facts set out in Part III of this Settlement Agreement as well as the breach of this Settlement Agreement.
27. Bharti acknowledges that, if the Tribunal approves this Settlement Agreement and Bharti fails to comply with any term in it, proceedings may be brought in order to ensure compliance with the terms of the Settlement Agreement.
28. Bharti waives any defences to a proceeding referenced in paragraphs 26 or 27 that are based on the limitation period in the Act, provided that no such proceeding shall be commenced later than six years from the date of the occurrence of the last failure to comply with this Settlement Agreement.
29. The parties will seek approval of this Settlement Agreement at the Settlement Hearing before the Tribunal, which shall be held on a date determined by the Tribunal's Governance and Tribunal Secretariat in accordance with this Settlement Agreement and the Tribunal's Rules of Procedure.
30. Bharti will attend the Settlement Hearing in person or by video conference.
31. The parties confirm that this Settlement Agreement sets forth all of the agreed facts that will be submitted at the Settlement Hearing, unless the parties agree that additional facts should be submitted at the Settlement Hearing.
32. If the Tribunal approves this Settlement Agreement:
(a) Bharti irrevocably waives all rights to a full hearing, judicial review or appeal of this matter under the Act; and
(b) neither party will make any public statement that is inconsistent with this Settlement Agreement or with any additional agreed facts submitted at the Settlement Hearing.
33. Whether or not the Tribunal approves this Settlement Agreement, Bharti will not use, in any proceeding, this Settlement Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for any attack on the Commission or the Tribunal's jurisdiction, alleged bias, alleged unfairness or any other remedies or challenges that may be available.
34. If the Tribunal does not approve this Settlement Agreement or does not make an order substantially in the form of the Order attached as Schedule "A" to this Settlement Agreement:
(a) this Settlement Agreement and all discussions and negotiations between the parties before the Settlement Hearing will be without prejudice to the Commission and Bharti; and
(b) the Commission and Bharti will each be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing on the merits of the allegations contained in an Application for Enforcement Proceeding based on the conduct described herein. Any such proceedings, remedies and challenges will not be affected by this Settlement Agreement, or by any discussions or negotiations relating to this Settlement Agreement.
35. The parties will keep the terms of this Settlement Agreement confidential until the Settlement Hearing, except as is necessary to make submissions at the Settlement Hearing. If, for whatever reason, the Tribunal does not approve the Settlement Agreement, the terms of the Settlement Agreement shall remain confidential indefinitely, unless the parties otherwise agree in writing or if required by law.
36. This Settlement Agreement may be signed in one or more counterparts which together constitute a binding agreement.
37. A facsimile copy or other electronic copy of any signature will be as effective as an original signature.
DATED at Toronto, Ontario this 10th day of April, 2026.
"Wen Ye" |
"Stan Bharti" |
________________________________________________________ |
________________________________________________________ |
Witness (print name): Wen Ye |
STAN BHARTI |
DATED at Toronto, Ontario, this 10th day of April, 2026.
ONTARIO SECURITIES COMMISSION
By: |
"Bonnie Lysyk" |
________________________________________________________ |
|
Name: Bonnie Lysyk |
|
Title: Executive Vice President, Enforcement Division |
BETWEEN:
[Names of Adjudicators comprising the Panel] |
File No. [#] |
[Date order made]
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5)
WHEREAS on [date], the Capital Markets Tribunal held a hearing [select option,] to consider the joint request for a settlement hearing filed by the Ontario Securities Commission and Stan Bharti for approval of a settlement agreement dated [date] (the Settlement Agreement);
ON READING the joint request for a settlement hearing, the Application for Enforcement Proceeding dated [date], the Settlement Agreement and the written submissions of the Commission, on hearing the submissions of the representatives of the Commission and Bharti, and on being advised by the Commission that it has received payment from the respondent in the total amount of $1,750,000;
IT IS ORDERED THAT:
1. the Settlement Agreement is approved;
2. Within 45 days from the date of this Order, Bharti shall resign from any positions he holds as a director or officer of an issuer or registrant, pursuant to paragraphs 7 and 8.1 of s. 127(1) of the Act, except for 2051580 Ontario Inc, 2437357 Ontario Inc., or 2860485 Ontario Inc., (the Numbered Companies) provided that (i) Bharti, his spouse, the Bharti Investment Trust or his children are the only shareholders of the Numbered Companies, and (ii) only Bharti's spouse or his children are permitted to become, serve or act as the other directors or officers of the Numbered Companies for as long as Bharti remains a director or officer;
3. Bharti is permanently prohibited from becoming or acting as a director or officer of any issuer or registrant, pursuant to paragraphs 8 and 8.2 of s. 127(1) of the Act except for the Numbered Companies provided that (i) Bharti, his spouse, the Bharti Investment Trust or his children are the only shareholders of the Numbered Companies, and (ii) only Bharti's spouse or his children are permitted to become, serve or act as the other directors or officers of the Numbered Companies for as long as Bharti remains a director or officer;
4. Bharti is permanently prohibited from becoming or acting as a registrant or promoter, pursuant to paragraph 8.5 of s. 127(1) of the Act;
5. Bharti shall pay to the Commission an administrative penalty of $785,000, pursuant to paragraph 9 of s. 127(1) of the Act;
6. Bharti shall disgorge to the Commission $915,000, pursuant to paragraph 10 of s. 127(1) of the Act; and
7. Bharti shall pay to the Commission $50,000 for the costs of the investigation and proceeding, pursuant to s. 127.1 of the Act.
___________________________ |
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[Name of Panel Chair] |
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___________________________ |
___________________________ |
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[Name of Adjudicator] |
[Name of Adjudicator] |
BETWEEN:
1. The respondent, Neil Said, was a consultant and, for a brief time, CEO of Medivolve, Inc. (Medivolve, or theCompany), an Ontario reporting issuer. On April 2, 2020, Medivolve publicly announced it was acquiring 40% of a company called Amino for US$2 million cash and 15 million common shares. However, Stan Bharti, another Medivolve officer, and Said arranged for 3 million of those 15 million Medivolve shares to be allocated to Bharti, and another 2.8 million of the 15 million shares to be allocated to Said. They did not ensure that Medivolve disclosed their receipt of shares or report the transaction as a related-party transaction in its financial disclosures made in April 2020, contrary to Ontario securities law.
2. Officers and directors of public companies have important gatekeeping roles in ensuring the public is provided with accurate information. Said is being held accountable for authorizing Medivolve's non-compliance with Ontario securities law.
3. The parties will jointly file a request that the Tribunal issue a Notice of Hearing (the Notice of Hearing) to announce that it will hold a hearing (the Settlement Hearing) to consider whether, pursuant to sections 127 and 127.1 of the Securities Act, RSO 1990, c S.5, as amended (the Act), it is in the public interest for the Tribunal to make certain orders against Said.
4. The Ontario Securities Commission (the Commission) and Said jointly recommend settlement of the proceeding (the Proceeding) against Said in accordance with the terms and conditions set out in this agreement (the Settlement Agreement). Said consents to the making of an order (the Order) substantially in the form attached as Schedule "A" to this Settlement Agreement based on the facts set out herein.
5. For the purposes of the Proceeding, and any other regulatory proceeding commenced by the Commission or another securities regulatory authority, Said agrees with the facts set out in Part III of this Settlement Agreement and the conclusions in Part IV and V of this Settlement Agreement.
6. Medivolve was incorporated under the laws of British Columbia in 2005.{3} At all material times, the Company's head office was in Toronto, and it was a publicly listed reporting issuer on the Canadian Securities Exchange (the CSE).{4} Medivolve's securities have been subject to a cease-trade order since September 2024.
7. Neil Said is an Ontario lawyer. For more than a decade, he has worked for clients, including clients of Forbes & Manhattan, Inc., (Forbes), an Ontario company founded by Stan Bharti. Said provides legal and other services to clients, including Medivolve, through his professional corporation.
8. Medivolve retained Forbes in 2011 to provide consulting services. Through this consulting arrangement, Medivolve gained access to a range of legal, financial and other professionals, including Said.
9. While Bharti was directly involved in decision making at Medivolve at all material times, Said was a key figure providing legal and other services to Medivolve through his professional corporation during the relevant period, and he was Medivolve's CEO from March 30, 2020, to April 29, 2020. Said was also involved in reviewing Medivolve's financial disclosures with the Audit Committee before they were issued.
10. One of Bharti's contacts had co-founded a company called Exponential Genomics Inc. (Exponential). Exponential was researching new technology that could, if realized, potentially help speed-up development of a COVID-19 therapeutic. Exponential was presented to Medivolve as an investment opportunity.
11. On April 3, 2020, Medivolve issued a news release that it would acquire 40% of a new Exponential subsidiary, Amino Therapeutics Inc. (Amino), for US$2 million cash and 15 million Medivolve common shares. The release did not disclose that Said would be receiving shares as part of the transaction.
12. The transaction closed on April 13, 2020. However, only 5 million of the 15 million Medivolve shares were issued to Amino's owners. The remaining 10 million were issued to Bharti, Said, and others. Said received 2.8 million Medivolve shares valued at $0.305 per share, or $854,000, from the transaction through an Ontario numbered company. He was Medivolve's CEO when the Amino transaction closed.
13. Not all of Medivolve's directors were informed that Said would receive 2.8 million Medivolve shares from the Amino transaction before the board approved it. Additionally, Medivolve described the Ontario numbered company as a "non-related person" in a Form 9 filed with the CSE seeking approval for the transaction.
14. Medivolve issued a news release on April 13, 2020 announcing the Amino transaction had closed. The news release did not disclose that (i) Said had received 2.8 million Medivolve shares as part of the deal, or (ii) the deal was a related-party transaction.
15. Medivolve made its financial disclosures for the year ended December 31, 2019, including audited financial statements on April 24, 2020 and an amended MD&A on April 27, 2020. Medivolve did not disclose that Said received 2.8 million shares from the Amino transaction or report the deal as a related-party transaction.
16. Accordingly, Medivolve's financial disclosures for the year ended December 31, 2019 contained material misstatements, contrary to s. 122(1)(b) of the Act.
17. Said, as Medivolve's CEO, authorized Medivolve's non-compliance with Ontario securities law.
18. Said has accepted responsibility for his conduct, and he cooperated with the Commission's investigation.
19. By entering into a Settlement Agreement, Said has helped conserve Commission and Tribunal resources.
20. By engaging in the conduct described above, Said admits and acknowledges that,
(a) Medivolve made statements in its financial disclosures for 2019 that, in a material respect and at the time and in the light of the circumstances under which they were made, were misleading or untrue or failed to state a fact that was required or necessary to make the statement not misleading, contrary to s. 122(1)(b) of the Act; and
(b) Said, as CEO, authorized, permitted or acquiesced in Medivolve's non-compliance with Ontario securities law, contrary to s. 129.2 of the Act.
21. Said and the Commission agree to the terms of settlement set forth below.
22. Said consents to the Order substantially in the form attached as Schedule "A", pursuant to which it is ordered that:
(a) this Settlement Agreement is approved;
(b) Said shall resign from any positions he holds as a director or officer of an issuer or registrant, pursuant to paragraphs 7 and 8.1 of s. 127(1) of the Act, except that Said may continue as a director and officer of Neil Said Professional Corp. a non-reporting Ontario issuer through which he provides legal and consulting services, provided that none of the securities of Neil Said Professional Corp. are owned by or offered for sale to anyone other than Said;
(c) Said is prohibited from becoming or acting as a director or officer of any issuer or registrant for a period of 5 years, pursuant to paragraphs 8 and 8.2 of s. 127(1) of the Act, except for Neil Said Professional Corp. provided that none of the securities of Neil Said Professional Corp. are owned by or offered for sale to anyone other than Said;
(d) Said is prohibited from becoming or acting as a registrant or promoter for a period of 5 years, pursuant to paragraph 8.5 of s. 127(1) of the Act;
(e) Said shall pay to the Commission an administrative penalty of $200,000 pursuant to paragraph 9 of s. 127(1) of the Act;
(f) Said shall disgorge to the Commission $854,000, pursuant to paragraph 10 of s. 127(1) of the Act; and
(g) Said shall pay to the Commission $46,000 for the costs of the investigation and proceeding, pursuant to s. 127.1 of the Act;
23. Said shall pay the amounts set out in subparagraphs 22(e), (f), and (g) by wire transfer to the Commission prior to the issuance of the Order.
24. Said acknowledges that this Settlement Agreement and the Order may form the basis for orders of parallel effect in other jurisdictions in Canada. The securities laws of some other Canadian jurisdictions allow orders made in this matter to take effect in those other jurisdictions automatically, without further notice. Said should contact the securities regulator of any other jurisdiction in which Said intends to engage in any securities or derivatives-related activities, prior to undertaking such activities.
25. If the Tribunal approves this Settlement Agreement, no enforcement proceedings will be continued against Said under Ontario securities law based on the misconduct described in Part III of this Settlement Agreement unless Said fails to comply with any term in this Settlement Agreement, in which case enforcement proceedings may be brought or continued under Ontario securities law against Said that may be based on, among other things, the facts set out in Part III of this Settlement Agreement as well as the breach of this Settlement Agreement.
26. Said acknowledges that, if the Tribunal approves this Settlement Agreement and Said fails to comply with any term in it, proceedings may be brought in order to ensure compliance with the terms of the Settlement Agreement.
27. Said waives any defences to a proceeding referenced in paragraphs 25 or 26 that are based on the limitation period in the Act, provided that no such proceeding shall be commenced later than six years from the date of the occurrence of the last failure to comply with this Settlement Agreement.
28. The parties will seek approval of this Settlement Agreement at the Settlement Hearing before the Tribunal, which shall be held on a date determined by the Tribunal's Governance and Tribunal Secretariat in accordance with this Settlement Agreement and the Tribunal's Rules of Procedure.
29. Said will attend the Settlement Hearing in person or by video conference.
30. The parties confirm that this Settlement Agreement sets forth all of the agreed facts that will be submitted at the Settlement Hearing, unless the parties agree that additional facts should be submitted at the Settlement Hearing.
31. If the Tribunal approves this Settlement Agreement:
(a) Said irrevocably waives all rights to a full hearing, judicial review or appeal of this matter under the Act; and
(b) neither party will make any public statement that is inconsistent with this Settlement Agreement or with any additional agreed facts submitted at the Settlement Hearing.
32. Whether or not the Tribunal approves this Settlement Agreement, Said will not use, in any proceeding, this Settlement Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for any attack on the Commission or the Tribunal's jurisdiction, alleged bias, alleged unfairness or any other remedies or challenges that may be available.
33. If the Tribunal does not approve this Settlement Agreement or does not make an order substantially in the form of the Order attached as Schedule "A" to this Settlement Agreement:
(a) this Settlement Agreement and all discussions and negotiations between the parties before the Settlement Hearing will be without prejudice to the Commission and Said; and
(b) the Commission and Said will each be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing on the merits of the allegations contained in an Application for Enforcement Proceeding based on the conduct described herein. Any such proceedings, remedies and challenges will not be affected by this Settlement Agreement, or by any discussions or negotiations relating to this Settlement Agreement.
34. The parties will keep the terms of this Settlement Agreement confidential until the Settlement Hearing, except as is necessary to make submissions at the Settlement Hearing. If, for whatever reason, the Tribunal does not approve the Settlement Agreement, the terms of the Settlement Agreement shall remain confidential indefinitely, unless the parties otherwise agree in writing or if required by law.
35. This Settlement Agreement may be signed in one or more counterparts which together constitute a binding agreement.
36. A facsimile copy or other electronic copy of any signature will be as effective as an original signature.
DATED at Toronto, Ontario this 10th day of April, 2026.
"Jacqueline Daubney" |
"Neil Said" |
________________________________________________________ |
________________________________________________________ |
Witness (print name): Jacqueline Daubney |
NEIL SAID |
DATED at Toronto, Ontario, this 10th day of April, 2026.
ONTARIO SECURITIES COMMISSION
By: |
"Bonnie Lysyk" |
________________________________________________________ |
|
Name: Bonnie Lysyk |
|
Title: Executive Vice President, Enforcement Division |
BETWEEN:
[Names of Adjudicators comprising the Panel] |
File No. [#] |
[Date order made]
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990 c S.5)
WHEREAS on [date], the Capital Markets Tribunal held a hearing [select option,] to consider the joint request for a settlement hearing filed by the Ontario Securities Commission and Neil Said for approval of a settlement agreement dated [date] (the Settlement Agreement);
ON READING the joint request for a settlement hearing, the Application for Enforcement Proceeding dated [date], the Settlement Agreement and the written submissions of the Commission, on hearing the submissions of the representatives of the Commission and Said, and on being advised by the Commission that it has received payment from the respondent in the total amount of $1,100,000;
IT IS ORDERED THAT:
1. the Settlement Agreement is approved;
2. Said shall resign from any positions he holds as a director or officer of an issuer or registrant, pursuant to paragraphs 7 and 8.1 of s. 127(1) of the Act, except that Said may continue as a director and officer of Neil Said Professional Corp. a non-reporting Ontario issuer through which he provides legal and consulting services, provided that none of the securities of Neil Said Professional Corp. are owned by or offered for sale to anyone other than Said;
3. Said is prohibited from becoming or acting as a director or officer of any issuer or registrant for a period of 5 years, pursuant to paragraphs 8 and 8.2 of s. 127(1) of the Act, except for Neil Said Professional Corp. provided that none of the securities of Neil Said Professional Corp. are owned by or offered for sale to anyone other than Said;
4. Said is prohibited from becoming or acting as a registrant or promoter for a period of 5 years, pursuant to paragraph 8.5 of s. 127(1) of the Act;
5. Said shall pay to the Commission an administrative penalty of $200,000, pursuant to paragraph 9 of s. 127(1) of the Act;
6. Said shall disgorge to the Commission $854,000, pursuant to paragraph 10 of s. 127(1) of the Act; and
7. Said shall pay to the Commission $46,000 for the costs of the investigation and proceeding, pursuant to s. 127.1 of the Act.
___________________________ |
||
[Name of Panel Chair] |
||
___________________________ |
___________________________ |
|
[Name of Adjudicator] |
[Name of Adjudicator] |
{1} Medivolve continued under the laws of Canada in 2009. The Company has had multiple name changes and for much of the period at issue was named Questcap Inc. For ease of reference, the Company will be referred to as Medivolve throughout.
{2} The Company's securities were later traded on the NEO Exchange (now Cboe Canada).
{3} Medivolve continued under the laws of Canada in 2009. The Company has had multiple name changes and for much of the period at issue was named Questcap Inc. For ease of reference, the Company will be referred to as Medivolve throughout.
{4} The Company's securities were later traded on the NEO Exchange (now Cboe Canada).
Ontario Securities Commission and Nayeem Alli
BETWEEN:
File No. 2025-26
Adjudicator: |
M. Cecilia Williams |
May 8, 2026
WHEREAS the Capital Markets Tribunal held a hearing in writing to consider a motion by the Ontario Securities Commission to strike a portion of the respondent Nayeem Alli's written submissions on the merits of the Commission's application for enforcement proceeding Alli filed on February 26, 2026, and a request to strike a portion of Alli's written submissions on the Commission's motion to strike Alli filed on April 22, 2026, on the basis of settlement privilege;
ON READING the submissions of the parties;
IT IS ORDERED, for reasons to follow, that:
1. the following shall be struck from Alli's written submissions on the application:
a. on page 4, in response to paragraph 3, the entire first paragraph following the words "RESPONSE OF NAYEEM ALLI" and all the words prior to "the stress that the OSC" in the beginning sentence of the second paragraph;
b. on pages 4-5, in response to paragraph 3, the entire second sentence in the third paragraph following the words "never finally agreed to.";
c. on page 6, in response to paragraph 7, the remainder of the paragraph following "I was asked to do.";
d. on page 7, in response to paragraph 11, the words between "was the case" and "actually";
e. on page 10, in response to paragraph 18, the words between "its subsidiaries" and "I have however tool";
f. on page 11, in response to paragraph 19, the remainder of the paragraph following "continue along this path";
g. on page 12, response to paragraph 22, the remainder of the paragraph following "received a response.";
h. on page 13, in response to paragraph 23, the remainder of the sentence following "and punitive";
i. on page 15, in response to paragraph 26, the remainder of the paragraph following "the penalty be $3,000.";
j. on page 20, in response to paragraph 34, the remainder of the paragraph following "to become compliant.";
k. on page 22, in response to paragraph 41, the remainder of the sentence following "is more adequate";
l. on page 23, in response to paragraph 45, the words between "RESPONSE:" and "The seven-year";
m. on page 26, in response to paragraph 53, the remainder of the paragraph following "as an easy target.";
n. on page 27, in response to paragraph 55, the remainder of the first paragraph following the words "is beyond me." and in the first sentence of the second paragraph all words prior to "Please find attached.";
o. on page 29, in response to paragraph 64, the remainder of the first paragraph following the words "of this document."; and
p. on page 30, in response to paragraph 68(c), the words between "An overreach" and "I would be good".
2. the following shall be struck from Alli's written submissions on this motion:
a. on page 5, in paragraph 14, the words between "I engaged in settlement discussions," and "is directly relevant";
3. the Commission shall serve and file redacted versions of Alli's written submissions on the application and Alli's written submissions on the motion, with the portions indicated above struck by 4:30 p.m. on May 15, 2026; and
4. only the redacted versions of Alli's written submissions on the application and Alli's written submissions on the motion shall be available to the public.
BETWEEN:
File No. 2025-11
Adjudicators: |
Andrea Burke (chair of the panel) |
Jane Waechter |
|
Dale Ponder |
May 11, 2026
WHEREAS on May 8, 2026, the Capital Markets Tribunal held a hearing at 20 Queen Street West, 17th Floor, Toronto, Ontario and the Tribunal requested the parties to provide their availability for an additional hearing date for the hearing on the merits of Jack Marks' application dated June 19, 2025 (Application);
ON HEARING the submissions for each of Jack Marks, CNSX Markets Inc. and the Ontario Securities Commission and on being advised that all parties agree to the additional hearing date;
IT IS ORDERED THAT the hearing on the merits of the Application shall be heard on May 13, 2026 commencing at 11:00 a.m. EDT and May 19, 2026, commencing at 12:30 p.m. EDT at the Capital Markets Tribunal, located at 20 Queen Street West, 17th Floor, Toronto, Ontario, or as may be agreed to by the parties and set by the Registrar.
BETWEEN:
File No. 2025-11
Adjudicators: |
Andrea Burke (chair of the panel) |
Jane Waechter |
|
Dale Ponder |
May 11, 2026
WHEREAS on May 8, 2026, the Capital Markets Tribunal held a hearing at 20 Queen Street West, 17th Floor, Toronto, Ontario with respect to Jack Marks' motion dated May 6, 2026 for permission (the Leave Motion) to bring (a) a motion to introduce new evidence dated May 6, 2026 (the Marks New Evidence Motion) and (b) a motion for relief to obtain further documentary and testimonial evidence dated May 6, 2026 (the Marks Discovery Motion);
ON READING the materials filed by each of the parties, and on hearing the submissions made by each of the parties;
IT IS ORDERED, for reasons to follow, that:
1. the Leave Motion with respect to the Marks New Evidence Motion is granted, and
2. the Leave Motion with respect to the Marks Discovery Motion is dismissed.
BETWEEN:
File No. 2026-10
Adjudicators: |
James Douglas (chair of the panel) |
Judith Robertson |
|
Mary Condon |
May 11, 2026
WHEREAS on May 8, 2026, the Capital Markets Tribunal held a hearing by videoconference to consider a motion brought by Peter Michael Deeb for a continuation of the interim stay of the Final Order and Decision on Sanctions and Costs of the Canadian Investment Regulatory Organization dated February 3, 2026, issued by the Tribunal on March 9, 2026 (Interim Stay Order), last extended by order of the Tribunal on April 20, 2026;
ON READING the materials filed by Deeb and the Ontario Securities Commission, on hearing the submissions of the parties, and on considering that the Commission and CIRO staff do not take a position on the motion;
IT IS ORDERED that the Interim Stay Order shall remain in effect until 4:30 p.m. on June 5, 2026.
Ontario Securities Commission et al. -- ss. 127(1), 127.1
Citation: Ontario Securities Commission v Bharti, 2026 ONCMT 20
Date: 2026-05-08
File No. 2026-23
BETWEEN:
(Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)
Adjudicators: |
Cecilia Williams (chair of the panel) |
|
Cathy Singer |
||
Alan Stewart |
||
|
||
Hearing: |
By videoconference, May 8, 2026 |
|
|
||
Appearances: |
Adam Gotfried |
For the Ontario Securities Commission |
Susan Kimani |
||
|
||
Kevin Richard |
For Stan Bharti |
|
|
||
Lawrence Ritchie |
For Neil Said |
|
Hannah Davis |
||
The following reasons have been prepared for publication, based on the reasons delivered orally at the hearing, as edited and approved by the panel, to provide a public record of the oral reasons.
[1] The Ontario Securities Commission alleges that Stan Bharti and Neil Said breached s. 129.2 of the Securities Act.{1} Bharti and Said were officers and/or a director of Medivolve Inc., when it announced and closed an acquisition in April 2020, which resulted in the respondents receiving millions of Medivolve shares as part of the transaction. The Commission alleges that Bharti and Said failed to ensure that Medivolve disclosed their receipt of shares or reported the acquisition as a related party transaction in its financial disclosure, and therefore, authorized Medivolve's non-compliance with Ontario securities law.
[2] The Commission and the respondents have agreed to resolve the allegations, and they now seek approval of their settlement agreements. We have decided to approve the agreements and to order the sanctions and costs that the parties have proposed.
[3] The settlement agreements set out the factual background in detail. I will briefly summarize the facts.
[4] Medivolve was incorporated under the laws of British Columbia in 2005. At all material times, Medivolve's head office was in Toronto, and it was a publicly listed reporting issuer on the Canadian Securities Exchange. Medivolve's securities have been subject to a cease-trade order since September 2024.
[5] Bharti was the Chief Executive Officer of Medivolve from March 14, 2019 to March 30, 2020, and was a director of Medivolve from March 14, 2019 to April 29, 2020. At all material times, Bharti was directly involved in decision-making at Medivolve.
[6] Bharti has decades of experience in Ontario's capital markets. Bharti is the founder and executive chairman of Forbes & Manhattan Inc., an Ontario company. Medivolve retained Forbes in 2011 to provide consulting services. Through this consulting arrangement, Medivolve gained access to a range of legal, financial and other professionals who worked with Bharti, including Said.
[7] Said is an Ontario lawyer. Said provided legal and other services to clients of Forbes, including Medivolve, through his professional corporation during the relevant period. Said replaced Bharti as Medivolve's CEO from March 30, 2020 to April 29, 2020.
[8] On April 3, 2020, Medivolve announced it would acquire 40% of Amino Therapeutics Inc., for US $2 million cash and 15 million Medivolve common shares. Amino was a subsidiary of a medical technology company co-founded by one of Bharti's contacts.
[9] Medivolve did not announce in the April 3, 2020 news release that Bharti or Said would be receiving shares as part of the transaction.
[10] When the transaction closed on April 13, 2020, 10 million of the 15 million shares were not issued to Amino's owners. Bharti received 3 million Medivolve shares valued at $915,000, through a holding company, and Said received 2.8 million shares valued at $854,000 through an Ontario numbered company.
[11] Not all Medivolve's directors were informed that Bharti and Said would receive shares before the board approved the transaction. As a director of Medivolve at the time, Bharti did not recuse himself and voted to approve the deal. In seeking approval for the transaction, Medivolve also represented to the Canadian Securities Exchange that Bharti's and Said's holding companies were "non-related persons".
[12] Medivolve announced the closing of the transaction by news release on April 13, 2020, and filed its financial disclosures for the year ended December 31, 2019, including audited financial statements on April 24, 2020, and an amended MD&A on April 27, 2020. Neither the news release nor the financial disclosures mentioned that Bharti and Said had received shares or that the transaction was a related party transaction. Accordingly, Medivolve's financial disclosures contained material misstatements contrary to Ontario securities law.
[13] Section 129.2 of the Act states that a director or officer of a company who authorized, permitted or acquiesced in a company's non-compliance shall be deemed to also have not complied with Ontario securities law. The respondents acknowledge and admit that, as officers and/or directors, they authorized Medivolve's non-compliance with Ontario securities law and, therefore, they are deemed also to have not complied with Ontario securities law.
[14] The Commission and Bharti have agreed to the following terms of settlement:
a. Bharti must pay an administrative penalty of $785,000 and costs of the investigation and proceeding of $50,000, both of which he has already paid;
b. Bharti shall disgorge to the Commission $915,000, which he has already paid;
c. with limited exemptions, within 45 days from the date of the order, Bharti shall resign any position he holds as a director or officer of any issuer or registrant and may not be a director or officer of any issuer or registrant permanently; and
d. Bharti is permanently prohibited from becoming or acting as a registrant or promoter.
[15] The Commission and Said have agreed to the following terms of settlement:
a. Said must pay an administrative penalty of $200,000 and costs of the investigation and proceeding of $46,000, both of which he has already paid;
b. Said shall disgorge to the Commission $854,000, which he has already paid;
c. with limited exemptions, Said shall immediately resign any position he holds as a director or officer of any issuer or registrant and may not be a director or officer of any issuer or registrant for five years; and
d. Said will be subject to a five-year restriction on his ability to become or act as a registrant or promoter.
[16] Before today's hearing, we held a confidential conference with the parties. We had the opportunity to hear from the parties and to ask them questions about the settlements.
[17] Our role at today's hearing is to decide whether the negotiated settlements fall within a range of reasonable outcomes. In deciding whether to approve a settlement, the Tribunal respects the negotiation process and accords significant deference to the resolution reached by the parties. We do so in this case.
[18] The respondents' misconduct was serious. Accurate disclosure is a cornerstone of Ontario securities law and is essential to the fair and effective operation of Ontario's capital markets. The respondents failed to meet their obligation to ensure that Medivolve complied with its obligations to provide financial and other disclosure free of material misstatements.
[19] More is expected of experienced capital market participants. Both Bharti and Said marketed themselves to potential Forbes' clients and outside investors as being such, garnering unwarranted trust. Bharti had decades of experience in Ontario's capital markets, and he was directly involved in decision-making at Medivolve. Bharti also introduced Said to Medivolve and facilitated the transaction with Amino. Said, an Ontario lawyer for more than a decade, provided legal and other services to clients, including Medivolve. He replaced Bharti as CEO just prior to the announcement of the transaction.
[20] Both Bharti and Said benefited personally from the transaction by receiving shares which they then sought to hide from investors and regulators.
[21] We note that by agreeing to these settlements, Bharti and Said demonstrate that they recognize their wrongdoing and accept accountability for their misconduct.
[22] We are confident that the sanctions against Bharti and Said will act as a specific deterrent to them. We believe that the sanctions acknowledge the respective roles that each respondent played in the misconduct. Bharti was the most responsible and culpable for the misconduct. He was the CEO of Medivolve before Said and served longer in that position. He was also a director of the company while Said was not. As director, Bharti had multiple opportunities to be aware of the terms of the Amino transaction which had been introduced to Medivolve through him, and which was negotiated while he was the CEO. The sanctions also act as a general deterrent to emphasize the responsibility of directors and officers to ensure the accuracy of a company's disclosure.
[23] In conclusion, we find that the proposed settlements are reasonable and in the public interest. We will issue an order substantially in the form of the draft order attached to the settlement agreements.
Dated at Toronto this 8th day of May, 2026
{1} RSO 1990, c S.5 (the Act)
OSC Staff Notice 33-761 -- 2026 Examination Priorities for the Registration, Inspections and Examinations Division
The Registration, Inspections and Examinations Division (RIE) of the Ontario Securities Commission (OSC) is pleased to publish our examination priorities for fiscal 2026 -- 2027 (RIE's 2026 Examination Priorities).
Consistent with established practice, RIE's 2026 Examination Priorities reflect an extension of our core supervisory functions and are guided by a number of internal and external sources, including:
(i) findings and trends identified through our horizon scanning and ongoing regulatory oversight work
(ii) consultation and collaboration with other OSC divisions
(iii) co-ordination with our regulatory partners, including the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO)
(iv) developments in the capital markets, including emerging products, services, technologies, and business models
(v) continued engagement with registrants, capital market participants and other stakeholders
The information we receive helps direct our work so that it remains responsive, proportionate, and focused on areas that present increased risk of investor harm or market disruption. This year, RIE is proactively exploring and incorporating technological enhancements, specifically Artificial Intelligence (AI), to enhance our existing examinations processes. In doing so, RIE will continue to deliver robust oversight while leveraging modernized efficiencies across its entire examination program.
Through RIE's horizon scanning and engagement with stakeholders, RIE monitors emerging issues in the capital markets. As an example, RIE is currently working with other OSC divisions and with regulatory partners to assess the increased prevalence of 'ramp-and-dump' stock manipulation schemes and account intrusions in Canada. As always, RIE will continue to assess the controls registrants have in place to ensure investor protection considering emerging issues.
RIE's 2026 Examination Priorities are not an exhaustive list of the work RIE will undertake in fulfilling its responsibilities. RIE will be proactive in responding to new and emerging risks, evolving products and service offerings, market events and investor concerns, each of which may impact RIE's planned examinations.
(i) Proportionate and agile oversight
RIE will continue its risk-based examination approach by continuing to place emphasis on high-risk and high impact firms. High impact and high-risk firms are identified through the risk assessment questionnaire (RAQ) and we will continue to place emphasis on them this fiscal. The RAQ informs our selection of firms to examine and is shared with other divisions in the OSC and our CSA counterparts to optimize collaboration and achieve risk awareness objectives. By focusing on high impact and high-risk firms, RIE's regulatory focus is targeted appropriately to areas of higher impact and risk and permits scaling back of efforts in lower-risk areas.
High impact firms are those with considerable assets under management. A material issue with respect to the operations of one of these firms could potentially cause systemic risk to the Canadian capital markets. Given the systemic importance of high impact firms, their established governance and compliance systems are essential for an efficient, stable and competitive capital market while protecting investors from improper, unfair or fraudulent practices.
High risk firms identified through the data collected from the RAQ are risk ranked based on multiple factors and comprehensive analysis. Examinations of high-risk firms have proven to be an effective and efficient use of staff resources in the fulfillment of our oversight responsibilities.
(ii) Examinations of regulated entities
Last year, RIE's mandate expanded to include responsibility for the compliance examinations of regulated entities (including exchanges and clearing agencies), while ongoing oversight remains with the Trading and Markets Division (TM) and Corporate Finance Division (CF). Regulated entities each have significant importance in the Canadian capital markets making sound supervision fundamental to safe and efficient capital markets. TM and CF will continue to conduct an annual risk assessment of each regulated entity, which will inform the areas of focus for the compliance examinations conducted by RIE.
(iii) Assessing compliance with new and existing regulations
The ability to assess compliance with new and existing regulations is paramount to the success of RIE's examination program.
During the previous fiscal year, RIE developed and implemented a compliance program to assess derivatives dealers' compliance with National Instrument 93-101 Derivatives: Business Conduct (NI 93-101), which came into force in September 2024. The more recent examinations primarily focused on how firms have organized and overseen their derivatives business, including supervision structures, OTC derivatives trading, communications monitoring, and interactions with counterparties to support fair dealing outcomes. RIE staff will continue to examine derivatives dealers to assess ongoing compliance with NI 93-101 and to monitor the effectiveness of firms' implementation of its requirements.
Additionally, RIE will continue its examinations of registrant capital market participation fees and excess working capital filings to help ensure firms pay required fees and meet applicable capital obligations. During this fiscal year, RIE will enhance its risk-based approach to this work and, where feasible, explore the use of automation and AI to support data analysis and examination activities, with a focus on improving efficiency while maintaining appropriate oversight and regulatory judgment.
(iv) New examination areas
Last fiscal year, RIE launched risk-based direct compliance examinations of CIRO dealer members in coordination with CIRO, which will continue this year. RIE and CIRO staff will continue to work jointly and conduct examinations of a select number of firms where areas of risk have been identified. One area of focus for this fiscal is separately managed accounts. These examinations will enable RIE, in consultation with our Investment Management Division, and CIRO to identify potential risks, emerging trends and areas for improvement across the sector.
(v) Responding to changing market dynamics
RIE is aware of developments and changes in how our registrants are marketing products and services to clients and potential clients. In furtherance of the OSC's commitment to quickly deliver effective regulatory actions in anticipation of emerging trends, RIE, in collaboration with other CSA jurisdictions, will conduct a national thematic sweep of marketing practices across direct registrants. The purpose of the sweep is to assess firms' marketing practices, both traditional and digital, for compliance with Ontario securities law. Examinations will assess policies and procedures, oversight over marketing activities, performance advertising and disclosures. After completion of the sweep, findings and observations will be analyzed to consider whether updated industry guidance is necessary.
(vi) Taking swift and decisive regulatory action
For RIE to take swift and decisive regulatory action, RIE analyzes and responds to information that may raise issues related to compliance. A primary source of information is through our various categories of compliance examinations, which include for cause examinations.
For cause examinations are targeted, non-routine examinations initiated in response to specific concerns such as investor complaints, referrals from other regulatory branches or from horizon scanning. For cause examinations are critical in the deterrence of misconduct, and RIE will act swiftly and decisively in response to non-compliance that may result in investor harm.
RIE staff will use all regulatory tools available to address any non-compliance or other issues identified through any of our compliance examinations, which may include a referral to RIE's Registrant Conduct team.
(vii) Delivering timely guidance, findings and resources
RIE will continue to deliver timely guidance and findings to our stakeholders as soon as practicable so RIE's expectations are clear and transparent. RIE recently completed a focused examination of registrants' cybersecurity practices in collaboration with the CSA. The results of the examination will be published in the second quarter of this fiscal, and the report will summarize key observations, including identified findings and examples of effective practices observed by the CSA.
Additionally, RIE commenced a compliance initiative at the end of last fiscal related to registrants' use and implementation of AI systems in their operations (the AI Initiative). The AI initiative involves two phases. During the first phase, registrants were asked to complete a survey describing their use of AI systems. As part of the second phase, examinations are being conducted to assess that the firm and each individual acting on its behalf are complying with securities legislation with the implementation of AI systems in their operations. RIE will share insights and findings from the AI Initiative this fiscal.
In addition, RIE will continue to provide resources to registrants, market participants and other stakeholders to promote strong, proactive compliance practices that foster confidence in the capital markets and promote increased investor protection such as the Registrant Outreach programs and the Topical Guide for Registrants. Details on our upcoming Registrant Outreach programs, as well as materials for past events, are available through the OSC website.
RIE directs you to the following resources available through the OSC website, that will assist in preparing for an examination:
• OSC compliance reviews
• Navigating an OSC compliance review
For more details of RIE's operations, we encourage you to review RIE's most recent annual report.
If you have any questions regarding OSC Staff Notice 33-761, please refer them to any of the following:
Multilateral Instrument 11-102 Passport System and National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Securities Act s. 88 Cease to be a reporting issuer in BC -- The securities of the issuer are beneficially owned by not more than 50 persons and are not traded through any exchange or market -- The issuer is not an OTC reporting issuer; the securities of the issuer are beneficially owned by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders worldwide; no securities of the issuer are traded on a market in Canada or another country; the issuer is not in default of securities legislation.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.
Securities Act, R.S.B.C. 1996, c. 418, s. 88.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
Citation: 2026 BCSECCOM 156
May 5, 2026
¶ 1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).
Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):
(a) the British Columbia Securities Commission is the principal regulator for this application,
(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in Alberta, New Brunswick, Quebec, Prince Edward Island, Nunavut, Manitoba, Nova Scotia, Saskatchewan, Newfoundland and Labrador, Northwest Territories and Yukon, and
(c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
¶ 2 Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
¶ 3 This order is based on the following facts represented by the Filer:
1. the Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the US. Over-the-Counter Markets;
2. the outstanding securities of the Filer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;
3. no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;
4. the Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and
5. the Filer is not in default of securities legislation in any jurisdiction.
¶ 4 Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.
The decision of the Decision Makers under the Legislation is that the Order Sought is granted.
OSC File #: 2026-193
Everybody Loves Languages Corp. -- s. 1(6) of the OBCA
Applicant deemed to have ceased to be offering its securities to the public under ss. 1(6) of the Business Corporations Act (Ontario).
Business Corporations Act, R.S.O. 1990, c. B.16, as am., s. 1(6).
(Subsection 1(6) of the OBCA)
UPON the application of the Applicant to the Ontario Securities Commission (the "Commission") for an order pursuant to subsection 1(6) of the OBCA to be deemed to have ceased to be offering its securities to the public;
AND UPON the Applicant representing to the Commission that:
1. The Applicant is an "offering corporation" as defined in subsection 1(1) of the OBCA;
2. The registered and head office of the Applicant is located at 20 Bay St., 11th Floor, Toronto, Ontario, M5J 2N8;
3. The Applicant has no intention to seek public financing by way of an offering of securities;
4. On April 30, 2026, the Applicant was granted an order (the "Reporting Issuer Order") pursuant to subclause 1(10)(a)(ii) of the Securities Act (Ontario) that it has ceased to be a reporting issuer in Ontario and has ceased to be a reporting issuer or the equivalent in any other jurisdiction of Canada in accordance with the simplified procedure set out in section 19 of National Policy 11-206 Process for Cease to be a Reporting Issuer Applications; and
5. The representations set out in the Reporting Issuer Order continue to be true.
AND UPON the Commission being satisfied that to grant this order would not be prejudicial to the public interest;
IT IS HEREBY ORDERED pursuant to subsection 1(6) of the OBCA that the Applicant be deemed to have ceased to be offering its securities to the public.
DATED at Toronto on this 11th day of May, 2026.
OSC File #: 2026-202
I.G. Investment Management, Ltd.
National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions -- Relief granted to permit investment funds subject to NI 81-102 to invest in securities of related underlying investment funds that are not reporting issuers.
National Instrument 81-102 Investment Funds, ss. 2.5(2)(a) and (c), and 19.1.
Order No. 7750
May 05, 2026
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application (the Application) from IGIM on behalf of iProfile U.S. Equity Private Pool (the Initial Top Fund) and any additional existing mutual funds or those mutual funds established in the future of which IGIM or an affiliate of IGIM is the manager (the Additional Top Funds and together with the Initial Top Fund, the "Top Funds" and individually a Top Fund) for relief from:
1. Paragraph 2.5(2)(a) of NI 81-102, to permit each Top Fund that is a mutual fund to invest in securities of Wellington Late-Stage Growth Investors (Cayman) V L.P. (the Initial Underlying Wellington Fund), and/or in any other future investment funds, that are or will be managed by WMC (as defined below) (the Future Underlying Wellington Funds and together with the Initial Underlying Wellington Fund, the Underlying Wellington Funds) which will be non-redeemable investment funds that are not subject to NI 81-102; and
2. Paragraph 2.5(2)(c) of NI 81-102, to permit each Top Fund that is a mutual fund to invest in securities of the Underlying Wellington Funds, which will not be a reporting issuer in any jurisdiction.
(the Requested Relief)
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Manitoba Securities Commission is the principal regulator for this application;
(b) IGIM has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territory and Nunavut (together with Ontario and Manitoba, the Canadian Jurisdictions); and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by IGIM:
IGIM
1. IGIM is a corporation continued under the laws of Ontario. It is the trustee, portfolio advisor and manager of each Top Fund. IGIM's head office is in Winnipeg, Manitoba.
2. IGIM is registered as a Portfolio Manager and an Investment Fund Manager in Manitoba, Ontario and Quebec and as an Investment Fund Manager in Newfoundland and Labrador.
3. IGIM and the mutual funds it manages or advises are not in default of any of the requirements of securities legislation of any of the Canadian Jurisdictions.
The Top Funds
4. The Top Funds are, or will be, mutual funds subject to NI 81-102, organized and governed by the laws of a jurisdiction of Canada.
5. The securities of each Top Fund are, or will be, distributed to investors pursuant to a prospectus prepared in accordance with National Instrument 41-101 General Prospectus Requirements (NI 41-101) or National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), as applicable.
6. Securities of each Top Fund are, or will be, qualified for distribution in the Canadian Jurisdictions.
7. The Top Funds are, or will be, reporting issuers in the provinces and territories of Canada in which their securities are distributed.
8. The Initial Top Fund is not in default of securities legislation in any of the Jurisdictions.
9. The prospectus of each Top Fund discloses, or will disclose, in its description of the Top Fund's investment strategies that the Top Fund may invest up to 10% of its assets directly or indirectly in a diversified portfolio of privately held companies. This limit is consistent with the classification of the Underlying Wellington Funds as illiquid assets for purposes of NI 81-102.
10. Each Top Fund is, or will be, subject to National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) and IGIM has established an independent review committee (IRC) to review conflict of interest matters pertaining to the Top Funds as required by NI 81-107.
Wellington Capital Management and the Underlying Wellington Funds
11. Wellington Management Company LLP (together with its affiliates, WMC) is a leading independent, privately-owned financial services firm offering global private wealth management, asset management and strategic advisory services to pension funds, banks, family offices, institutions, and corporations. WMC, which is headquartered in Boston, Massachusetts provides these services on a discretionary, non-discretionary or consulting basis for domestic and non-U.S. clients. The firm is responsible for in excess of $1.3 trillion in client assets, as of December 31, 2025. WMC was founded in 1933 as a mutual fund company and has expanded its offerings over its almost 100 year history.
12. The Initial Underlying Wellington Fund will be a non-redeemable investment fund and will invest in private late-stage companies with proven management teams and business models that are seeking capital to accelerate growth prior to a potential IPO or sale (each a Portfolio Investment and collectively the Portfolio Investments).
13. The Initial Underlying Wellington Fund's objective is to achieve capital appreciation primarily through the above-noted Portfolio Investments, which are generally expected to be 1-4 years away (sometimes slightly longer) from a potential liquidity event. The Initial Underlying Wellington Fund principally will invest in equity securities such as common stock and convertible preferred stock, but also will consider investments through the capital structure, including debt securities or loans.
14. The Future Underlying Wellington Funds will provide exposure to investments in one or a combination of alternative or private market asset classes, including private equity, private credit, private infrastructure, private real estate, and other alternative investments.
15. The Initial Underlying Wellington Fund and each Future Underlying Wellington Fund will fall within the definition of "investment fund" under The Securities Act (Manitoba) (the Act).
16. The Underlying Wellington Funds will be managed by WMC. Wellington Management Canada ULC (WM Canada), an operating subsidiary of WMC, is registered with the securities commissions of Ontario, Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Québec and Saskatchewan as a Portfolio Manager and Exempt Market Dealer. In addition, WM Canada is registered as a Commodity Trading Manager in Ontario.
17. The Underlying Wellington Funds will not be subject to NI 81-102 and will not prepare a simplified prospectus in accordance with NI 81-101 or a long form prospectus in accordance with NI 41-101.
18. The Underlying Wellington Funds will not be reporting issuers in any of the Canadian Jurisdictions or listed on any recognized stock exchange.
19. The Top Funds qualify to invest in the Underlying Wellington Funds pursuant to an exemption from the prospectus requirement under applicable Canadian securities laws.
20. WMC is not in default of the securities legislation of any of the Canadian Jurisdictions.
21. The Underlying Wellington Funds are not expected to be in default of the securities legislation of any of the Canadian Jurisdictions.
22. There will be no established, publicly available secondary market for interests in the Underlying Wellington Funds nor will there generally be any redemption rights applicable to the Top Funds as investors of the Underlying Wellington Funds. As such, the Top Funds will not be able to readily dispose of its interest in the Underlying Wellington Funds and any interest that the Top Funds hold in an Underlying Wellington Fund will be considered an "illiquid asset" under NI 81-102.
23. A Top Fund will invest in, and redeem (if redemption rights apply), each Underlying Wellington Fund at an objective price, which for this purpose will be: a) in respect of an Underlying Wellington Fund that is open-ended, the NAV per security of the applicable class or series of the Underlying Wellington Fund; and b) in respect of an Underlying Wellington Fund that is closed-ended, a fixed price at the time of investment or acquisition.
24. At least 85% of the aggregate asset value of an Underlying Wellington Fund will be invested in (i) direct private investments valued by a firm that is independent of IGIM and WMC and/or (ii) other securities valued by an independent pricing service.
25. On an annual basis, the financial statements of each Underlying Wellington Fund will be audited by an independent third-party auditing firm (the Independent Auditor) selected by WMC (e.g., PricewaterhouseCoopers will be engaged to perform the annual financial statement audit for the Initial Underlying Wellington Fund). The Independent Auditor's audit also considers if controls and processes are in place to ensure Portfolio Investments are valued in accordance with WMC's valuation policy.
26. WMC's valuation policies, as they apply to private and public securities held by an Underlying Wellington Fund are consistent with U.S. Generally Accepted Accounting Principles.
General
27. Absent the Requested Relief, a Top Fund would be prohibited by sections 2.5(2)(a) and 2.5(2)(c) of NI 81-102 from purchasing or holding securities of the Underlying Wellington Funds because the Underlying Wellington Fund (i) is not subject to NI 81-102 and (ii) is not a reporting issuer in the Canadian Jurisdictions.
28. IGIM believes that a meaningful allocation to private assets provides Top Funds' investors with differentiated diversification opportunities and represents an appropriate investment tool for the Top Funds that has not been widely available in the past. Private asset investments have historically performed well in down markets; IGIM believes that permitting the Top Funds to invest in these private assets through the Underlying Wellington Funds offers the potential to improve a Top Funds' risk-adjusted returns.
29. An investment in an Underlying Wellington Fund by a Top Fund is an efficient and cost-effective way for the Top Fund to implement a private investment strategy that may include private equity, private credit and private infrastructure asset classes. IGIM believes it is in the best interests of the Top Funds to make use of WMC's experience and expertise as a private asset investor to achieve a Top Fund's desired exposure to a diversified portfolio of private assets. An investment in an Underlying Wellington Fund will provide a Top Fund with exposure to top-tier private equity, private credit, and/or infrastructure assets that the Top Funds would not be able access directly. Without established relationships and internal private asset expertise, which WMC possesses but IGIM does not, it is extremely difficult to invest alongside private asset managers. A Top Fund's investment in an Underlying Wellington Fund will provide access to WMC's well-established deal sourcing channels that provide investors access to differentiated investment opportunities.
30. Further, WMC provides an active and purposeful approach to portfolio construction, risk management and diversification of alternative and private market asset classes, including private equity, private credit, private infrastructure, private real estate, and other alternative investments, that IGIM does not have the expertise to replicate. WMC engages in extensive due diligence of each investment opportunity to ensure that the investment meets the expected risk/return profile for the Underlying Wellington Funds participating in the investment. In summary, investing in the Underlying Wellington Funds will provide the Top Funds with access to investments in hard to access private assets that the Top Funds would not otherwise have exposure to through portfolios of private asset investments diversified across different strategies, industry sectors and geographies constructed by WMC's experienced private asset professionals.
31. Investments in the Underlying Wellington Funds are considered illiquid investments under NI 81-102 and therefore are not permitted to exceed 10% of the NAV of a Top Fund. The investments in an Underlying Wellington Fund are included as part of the calculation for the purposes of the illiquid asset restriction in section 2.4 of NI 81-102 for the Top Fund. NI 81-102 allows holdings in illiquid investments so long as the aggregate exposure to illiquid investments is within the thresholds of the rule. IGIM has its own liquidity policy and manages the Top Funds' liquidity prudently under the policy.
32. As with any other illiquid investment, the portfolio managers of a Top Fund will carefully monitor the portfolio holdings and the liquidity needs of the Top Fund. Further, while the Top Funds may go up to 10% in illiquid assets in accordance with NI 81-102, IGIM intends to keep the percentage of a Top Fund that is invested in illiquid assets at a moderately lower percentage to allow for fluctuations in the size of the Top Fund in order to manage compliance with the 10% restriction.
33. IGIM expects that the main source of liquidity for a Top Fund's interest in an Underlying Wellington Fund would be for the Top Fund to turn to the secondary market where a Top Fund could seek out other institutional investors who, subject to WMC's approval, could purchase a Top Fund's interest in an Underlying Wellington Fund in a secondary transaction.
34. Given the readily available liquidity of the remainder of a Top Fund's investment portfolio, IGIM believes that the risk of the Top Fund needing to liquidate its investments in the illiquid Underlying Wellington Funds when markets are under stress or in other environments where liquidity may be reduced is remote.
35. An investment by a Top Fund in an Underlying Wellington Fund will only be made if the investment is, or will be, compatible with the investment objectives and strategies of the Top Fund.
36. The decision to permit a Top Fund to invest in the Underlying Wellington Funds represents IGIM's business judgment and is not influenced by factors other than the best interests of the Top Fund.
37. A Top Fund will not actively participate in the business or operations of the Underlying Wellington Funds.
38. In respect of an investment by a Top Fund in the Underlying Wellington Funds, no sales or redemption fees will be paid as part of the investment in the Underlying Wellington Funds.
39. In respect of an investment by a Top Fund in the Underlying Wellington Funds, no management fees or incentive fees will be payable by the Top Fund that, to a reasonable person, would duplicate a fee payable by the Underlying Wellington Funds for the same service.
40. Where applicable, a Top Fund's investment in the Underlying Wellington Funds, will be disclosed to investors in a Top Fund's quarterly portfolio holding reports, financial statements and fund facts.
41. The prospectus of a Top Fund will disclose in the next renewal or amendment the fact that the Top Fund is invested in an Underlying Wellington Fund.
42. Aside from the sections covered by the Requested Relief, a Top Fund will comply with section 2.5 of NI 81-102 with respect to the investment in the Underlying Wellington Funds.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that:
1. No Top Fund will actively participate in the business or operations of the Underlying Wellington Funds.
2. In respect of an investment by a Top Fund in the Underlying Wellington Funds, no sales or redemption fees will be paid as part of the investment in the Underlying Wellington Funds.
3. The investment by a Top Fund in securities of an Underlying Wellington Fund is compatible with the investment objectives and strategies of the Top Fund.
4. In respect of an investment by a Top Fund in the Underlying Wellington Funds, no management fees or incentive fees will be payable by the Top Fund that, to a reasonable person, would duplicate a fee payable by the Underlying Wellington Funds for the same service.
5. Where applicable, a Top Fund's investment in the Underlying Wellington Funds, will be disclosed to investors in such Top Fund's quarterly portfolio holding reports, financial statements and fund facts.
6. The prospectus of each Top Fund will disclose in the next renewal or amendment the fact that the Top Fund is invested in the Underlying Wellington Funds.
7. The manager of each of the Top Funds complies with section 5.1 of NI 81-107 and the manager and the IRC of the Top Funds will comply with section 5.4 of NI 81-107 for any possible standing instructions concerning an investment by a Top Fund in the Underlying Wellington Funds.
8. At least 85% of the aggregate asset value of an Underlying Wellington Fund will be invested in (i) underlying third party private funds that are valued by a firm that is independent of IGIM and WMC, (ii) direct private investments valued by a firm that is independent of IGIM and WMC and/or (iii) other securities valued by an independent pricing service.
Accelerate Financial Technologies Inc.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted to facilitate the offering of securities of mutual fund securities and exchange-traded fund securities within the same form of prospectus -- relief granted from the requirement in NI 81-101 to prepare and file a simplified prospectus for mutual fund securities provided that a long form prospectus is prepared and filed in accordance with NI 41-101 -- disclosure required by NI 81-101 for mutual fund securities and not contemplated by NI 41-101 will be disclosed in long form prospectus under relevant headings -- Filer will file ETF Facts in the form prescribed by Form 41-101F4 in respect of exchange-traded fund securities of a fund and will file a Fund Facts document in the form prescribed by Form 81-101F3 in respect of mutual fund securities of a fund -- technical relief granted to enable the funds to comply with Parts 9, 10 and 14 of NI 81-102 as if the mutual fund class and exchange-traded fund class were separate funds.
National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 2.1 and 6.1.
National Instrument 81-102 Investment Funds, Parts 9, 10 and 14 and s. 19.1.
Citation: Re Accelerate Financial Technologies Inc., 2026 ABASC 69
May 8, 2026
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer in respect of Accelerate Absolute Return Fund, Accelerate Arbitrage Fund, Accelerate Canadian Long Short Equity Fund, Accelerate OneChoice Alternative Multi-Asset Fund and Accelerate Diversified Credit Income Fund (collectively, the Existing Funds) and such other mutual funds as are managed or may be managed by the Filer now or in the future that offer ETF Securities (as defined below) and Mutual Fund Securities (as defined below) (collectively with the Existing Funds, the Funds, and each, a Fund) for a decision under the securities legislation of the Jurisdictions (the Legislation) that exempts:
(a) the Filer and each Fund from the requirement to prepare and file a simplified prospectus for the Mutual Fund Securities in accordance with the provisions of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and in the form prescribed by Form 81-101F1 Contents of Simplified Prospectus (Form 81-101F1), provided that the Filer files a prospectus for the Mutual Fund Securities in accordance with the provisions of National Instrument 41-101 General Prospectus Requirements (NI 41-101), other than the requirements pertaining to the filing of ETF Facts, and in the form prescribed by Form 41-101F2 Information Required in an Investment Fund Prospectus (Form 41-101F2) (the Simplified Prospectus Form Requirements); and
(b) the Filer and each Fund from the requirements of Parts 9, 10 and 14 of National Instrument 81-102 Investment Funds (NI 81-102) to the extent required to permit the Filer and each Fund to treat the ETF Securities and the Mutual Fund Securities as if such securities were separate funds in connection with their compliance with the provisions of Parts 9, 10 and 14 of NI 81-102 (the Sales and Redemption Requirements),
(collectively, the Exemptions Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for the application;
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
The following terms used in this decision have the following meanings.
Authorized Dealer means a registered dealer that has entered, or intends to enter, into an agreement with the manager of a Fund authorizing the dealer to subscribe for, purchase and redeem Creation Units (as defined below) from one or more Funds on a continuous basis from time to time.
Basket of Securities means, in relation to a Fund, a group of securities or assets representing the constituents of the Fund.
Designated Broker means a registered dealer that has entered, or intends to enter, into an agreement with the Filer on behalf of a Fund to perform certain duties in relation to the ETF Securities of the Fund, including the posting of a liquid two-way market for the trading of the Fund's ETF Securities on the TSX or another Marketplace.
ETF Facts means a prescribed summary disclosure document required pursuant to NI 41-101 in respect of one or more classes or series of ETF Securities being distributed under a prospectus.
ETF Securities means securities of an exchange-traded class or series of a Fund that are listed or will be listed on the TSX or another Marketplace and that are or will be distributed pursuant to a prospectus prepared in accordance with NI 41-101 and Form 41-101F2.
Fund Facts means a prescribed summary disclosure document required pursuant to NI 81-101 in respect of one or more classes or series of Mutual Fund Securities being distributed under a prospectus.
Marketplace means a "marketplace" as defined in National Instrument 21-101 Marketplace Operation that is located in Canada.
Mutual Fund Securities means securities of a non-exchange-traded class or series of a Fund that will be distributed pursuant to a prospectus prepared in accordance with NI 41-101 and Form 41-101F2.
Prescribed Number of ETF Securities means, in relation to a Fund, the number of ETF Securities of the Fund determined by the Filer from time to time for the purpose of subscription orders, exchanges, redemptions or for other purposes.
TSX means Toronto Stock Exchange.
This decision is based on the following facts represented by the Filer:
The Filer
1. The Filer is a corporation incorporated under the laws of the Province of Alberta, with its head office in Calgary, Alberta.
2. The Filer is registered as a portfolio manager, investment fund manager and exempt market dealer in Alberta and Ontario.
3. The Filer is, or will be, the investment fund manager of each Fund.
4. The Filer is not in default of securities legislation in any of the jurisdictions of Canada.
The Funds
5. Each Fund is, or will be, a mutual fund structured as a trust or a corporation or a class thereof that is governed by the laws of a jurisdiction of Canada. Each Fund is, or will be, a reporting issuer in the jurisdiction(s) of Canada in which its securities are distributed.
6. Each Fund offers, or will offer, ETF Securities and Mutual Fund Securities.
7. Subject to any exemptions therefrom that have been, or may be, granted by the applicable securities regulatory authorities, each Fund is, or will be, subject to NI 81-102.
8. The ETF Series Units are, or will be, listed on the TSX or another Marketplace. The Filer will not file a final prospectus for any of the Funds in respect of the ETF Securities until the applicable Marketplace has conditionally approved the listing of the ETF Securities.
9. Mutual Fund Securities will not be listed on the TSX or another Marketplace.
10. The ETF Securities and the Mutual Fund Securities are, or will be, distributed on a continuous basis in one or more of the jurisdictions of Canada under a prospectus.
11. ETF Securities may generally only be subscribed for and purchased directly from the Funds (Creation Units) by Authorized Dealers or Designated Brokers. Authorized Dealers or Designated Brokers subscribe for Creation Units for the purpose of facilitating investor purchases of ETF Securities on the TSX or another Marketplace.
12. In addition to subscribing for and re-selling Creation Units, Authorized Dealers and Designated Brokers are also generally engaged in purchasing and selling ETF Securities of the same class or series as the Creation Units in the secondary market. Other dealers may also be engaged in purchasing and selling ETF Securities of the same class or series as the Creation Units in the secondary market, despite not being an Authorized Dealer or Designated Broker.
13. Each Fund has appointed or will appoint a Designated Broker to perform certain other functions, including standing in the market with a bid and ask price for ETF Securities for the purpose of maintaining liquidity for the ETF Securities.
14. Except for Authorized Dealer and Designated Broker subscriptions for Creation Units, as described above, ETF Securities generally cannot be purchased directly from a Fund. Investors are generally expected to purchase and sell ETF Securities, directly or indirectly, through dealers executing trades through the facilities of the TSX or another Marketplace. ETF Securities may also be issued directly to securityholders upon a reinvestment of distributions of income or capital gains.
15. Securityholders that are not Designated Brokers or Authorized Dealers that wish to dispose of their ETF Securities may generally do so by selling their ETF Securities on the TSX or other Marketplace, through a registered dealer, subject only to customary brokerage commissions. A securityholder that holds a Prescribed Number of ETF Securities or multiple thereof may exchange such ETF Securities for Baskets of Securities and/or cash in the discretion of the Filer. Securityholders may also redeem ETF Securities for cash at a redemption price equal to 95% of the closing price of the ETF Securities on the TSX or other Marketplace on the date of redemption, subject to a maximum redemption price of the applicable net asset value per ETF Security.
16. Investors will be able to subscribe for or purchase Mutual Fund Securities directly from a Fund through appropriately registered dealers.
17. Holders of Mutual Fund Securities of a Fund will be able to redeem such securities in any number for cash directly from the Fund through appropriately registered dealers. The redemption price per Mutual Fund Security will be equal to the net asset value per Mutual Fund Security on the effective day of redemption.
18. The Existing Funds are not in default of securities legislation in any of the jurisdictions of Canada.
Simplified Prospectus Form Requirements
19. The Filer believes it is more efficient and expedient to include all of the classes and series of each Fund, including the Mutual Fund Securities and ETF Securities of the Fund, in one prospectus form instead of two different prospectus forms and that this presentation will assist in providing full, true and plain disclosure of all material facts relating to all classes and series of securities of the Fund. The Filer will file a long form prospectus in respect of the ETF Securities and Mutual Fund Securities of each Fund.
20. The Filer will file ETF Facts in the form prescribed by Form 41-101F4 Information Required in an ETF Facts Document in respect of each class or series of ETF Securities, and will file Fund Facts in the form prescribed by Form 81-101F3 Contents of Fund Facts Document in respect of each class or series of Mutual Fund Securities.
21. The Filer will ensure that any additional disclosure included in the prospectus relating to the Mutual Fund Securities will not interfere with an investor's ability to differentiate between the Mutual Fund Securities and the ETF Securities and their respective attributes.
22. The Funds will comply with the provisions of NI 41-101 when filing any prospectus or any amendment thereto.
23. The Mutual Fund Securities of each Fund will be subject to the prospectus and Fund Facts delivery obligations set out in NI 81-101.
Sales and Redemption Requirements
24. Parts 9, 10 and 14 of NI 81-102 do not contemplate the simultaneous offering of both Mutual Fund Securities and ETF Securities in a single fund structure. Accordingly, without the Exemption Sought from the Sales and Redemption Requirements, the Filer and the Funds would not be able to technically comply with those parts of NI 81-102.
25. The Exemption Sought from the Sales and Redemption Requirements will permit the Filer and each Fund that offers both Mutual Fund Securities and ETF Securities to treat the Mutual Fund Securities and the ETF Securities as if such securities were separate funds in connection with their compliance with Parts 9, 10 and 14 of NI 81-102. The Exemption Sought from the Sales and Redemption Requirements will enable each of the ETF Securities and Mutual Fund Securities to comply with Parts 9, 10 and 14 of NI 81-102 as appropriate for the type of security being offered.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought from the Simplified Prospectus Form Requirements is granted, provided that:
(a) the Filer files a long form prospectus in respect of the Mutual Fund Securities in accordance with the requirements of NI 41-101 and Form 41-101F2, other than the requirements pertaining to the filing of an ETF Facts;
(b) the Filer includes disclosure required pursuant to Form 81-101F1 (that is not contemplated by NI 41-101F2) in respect of the Mutual Fund Securities in each Fund's prospectus, as applicable; and
(c) the Filer includes disclosure regarding this decision under the heading "Exemptions and Approvals" in each Fund's prospectus.
The decision of the Decision Makers under the Legislation is that the Exemption Sought from the Sales and Redemption Requirements is granted, provided that:
(a) with respect to its Mutual Fund Securities, each Fund complies with the provisions of Parts 9, 10 and 14 of NI 81-102 that apply to mutual funds that are not exchange-traded mutual funds; and
(b) with respect to its ETF Securities, each Fund complies with the provisions of Parts 9 and 10 of NI 81-102 that apply to exchange-traded mutual funds.
Temporary, Permanent & Rescinding Issuer Cease Trading Orders
Company Name |
Date of Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/Revoke |
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THERE IS NOTHING TO REPORT THIS WEEK. |
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Company Name |
Date of Order |
Date of Revocation |
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Baymount Incorporated |
May 6, 2026 |
__________ |
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EV Minerals Corporation |
May 6, 2026 |
__________ |
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Canada Carbon Inc. |
May 6, 2026 |
__________ |
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ADYA INC. |
May 6, 2026 |
__________ |
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American Aires Inc. |
May 6, 2026 |
__________ |
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MyndTec Inc. |
May 6, 2026 |
__________ |
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AnalytixInsight Inc. |
May 6, 2026 |
__________ |
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LevelJump Healthcare Corp. |
May 6, 2026 |
__________ |
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NorthStar Gaming Holdings Inc. |
May 6, 2026 |
__________ |
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Prophecy DeFi Inc. |
May 6, 2026 |
__________ |
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Montfort Capital Corp. |
May 6, 2026 |
__________ |
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Blockchain Venture Capital Inc. |
May 6, 2026 |
__________ |
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Current Water Technologies Inc. |
May 6, 2026 |
__________ |
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Stable Infrastructure Inc. |
May 6, 2026 |
__________ |
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Rivalry Corp. |
May 6, 2026 |
__________ |
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XTM Inc. |
May 6, 2026 |
__________ |
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ZYUS Life Sciences Corporation |
May 6, 2026 |
__________ |
Temporary, Permanent & Rescinding Management Cease Trading Orders
Company Name |
Date of Order |
Date of Lapse |
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THERE IS NOTHING TO REPORT THIS WEEK. |
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Outstanding Management & Insider Cease Trading Orders
Company Name |
Date of Order or Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/Expire |
Date of Issuer Temporary Order |
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Performance Sports Group Ltd. |
19 October 2016 |
31 October 2016 |
31 October 2016 |
__________ |
__________ |
Company Name |
Date of Order |
Date of Lapse |
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Agrios Global Holdings Ltd. |
September 17, 2020 |
__________ |
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Sproutly Canada, Inc. |
June 30, 2022 |
__________ |
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iMining Technologies Inc. |
September 30, 2022 |
__________ |
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Alkaline Fuel Cell Power Corp. |
April 4, 2023 |
__________ |
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mCloud Technologies Corp. |
April 5, 2023 |
__________ |
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FenixOro Gold Corp. |
July 5, 2023 |
__________ |
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HAVN Life Sciences Inc. |
August 30, 2023 |
__________ |
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Perk Labs Inc. |
April 4, 2024 |
__________ |
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QYOU MEDIA INC. |
May 1, 2026 |
__________ |
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Lithium Ionic Corp. |
May 4, 2026 |
__________ |
CSA Notice and Request for Comment -- Proposed Amendments and Changes to the Issuer Bid, Take-Over Bid and Beneficial Ownership Reporting Regimes
May 14, 2026
The Canadian Securities Administrators (the CSA or we) are publishing, for a 90-day comment period, proposed amendments to
• National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102),
• National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (NI 62-103), and
• National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104)
(collectively, the Proposed Amendments), proposed changes to
• Companion Policy 51-102CP Continuous Disclosure Obligations (51-102CP), and
• National Policy 62-203 Take-Over Bids and Issuer Bids (NP 62-203)
(collectively, the Proposed Changes), related proposed consequential amendments to
• Multilateral Instrument 13-102 System Fees (MI 13-102),
• National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101),
• National Instrument 44-102 Shelf Distributions (NI 44-102),
• Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (MI 51-105),
• Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101), and
in the jurisdictions in which such instruments have been adopted (collectively, the Consequential Amendments), and related proposed consequential changes to
• Companion Policy 55-104CP Insider Reporting Requirements and Exemptions (55-104CP), and
• Companion Policy 61-101CP To Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (61-101CP)
in the jurisdictions in which such policies have been adopted (collectively, the Consequential Changes).
The text of the Proposed Amendments, the Proposed Changes, the Consequential Amendments, and the Consequential Changes are set out in Annexes A through L of this Notice, and will also be available on websites of CSA jurisdictions, including:
The Proposed Amendments and the Proposed Changes are intended to provide issuers with greater flexibility to repurchase their own securities, enhance transparency of ownership of derivative interests in specified circumstances, and reduce regulatory burden and enhance the integrity of the issuer bid, take-over bid, and early warning reporting regimes through clarifying amendments and supplemental policy guidance. In particular, the Proposed Amendments and the Proposed Changes would:
• introduce a new issuer bid exemption to allow selective repurchases by an issuer of securities of its own issue, subject to certain parameters;
• require enhanced disclosure with respect to interests in derivatives that substantially replicate the economic consequences of ownership (equity equivalent derivatives) and other agreements, arrangements, or understandings that have the effect of altering economic exposure to an issuer in the context of take-over bids and proxy solicitations for which an information circular is required to be sent;
• provide further guidance on the circumstances where the disclosure or use of equity equivalent derivatives may engage the public interest jurisdiction of securities regulatory authorities;
• provide guidance on the appropriate timing of disclosure of an acquiror's "plans or future intentions" in an early warning report (an EWR);
• specify filing requirements and clarify the appropriate application or interpretation of certain provisions in respect of take-over bids, issuer bids, and the early warning reporting regime (the early warning system); and
• address certain issues of a targeted or housekeeping nature related to circumstances where exemptive relief is currently required.
We have proposed a new exemption, as section 4.6.1 of NI 62-104, that would allow issuers to repurchase up to 5% of the outstanding securities of a class in a 12-month period, provided that certain conditions are satisfied (the Selective Repurchase Exemption).
(a) Background
Subject to certain limited exceptions, an offer to acquire or redeem securities of an issuer made by the issuer to one or more persons in Canada, including an acquisition or redemption of securities of the issuer by the issuer from those persons, constitutes an "issuer bid".{1} An issuer that wishes to acquire or redeem its securities must either comply with the issuer bid requirements set out in Part 2 of NI 62-104 or rely on one of the exemptions set out in Part 4 of NI 62-104. Although section 4.2 of NI 62-104 exempts an offeror from the take-over bid requirements if purchases are made from a limited number of sellers in compliance with certain pricing restrictions, there is no corresponding "private agreement" exemption from the issuer bid requirements.
Recently, we have observed increased interest in selective repurchases. Various stakeholders have suggested that the Canadian issuer bid regime is overly restrictive, particularly given that selective repurchases are permissible in the United States (U.S.). These stakeholders have commented that an issuer's inability to repurchase securities selectively can lead to potential market dispositions by blockholders, which in turn can result in an overhang that artificially depresses the market price of the securities to the detriment of all securityholders. These stakeholders have also commented that the Canadian issuer bid regime can inhibit investment since blockholders have fewer avenues for liquidity in Canada relative to other jurisdictions.
(b) Policy Rationale for the Selective Repurchase Exemption
The proposed Selective Repurchase Exemption, described further below, represents a significant enhancement to the Canadian issuer bid regime, which currently does not permit bilateral private agreement share repurchases by issuers. We think it is appropriate to introduce the Selective Repurchase Exemption in order to:
• enhance the competitiveness of Canadian capital markets by easing restrictions on repurchases by issuers;
• provide issuers with greater flexibility to allocate their capital and undertake selective repurchases where a board of directors determines that doing so is in the issuer's best interests;
• enhance the attractiveness of Canadian investment by providing investors with more liquidity for larger blocks of securities;
• maintain a fair and efficient regime by limiting the availability of the exemption to classes of securities for which a liquid market exists, and requiring that a selective repurchase occur at a discount to the closing price of the class of securities on the market on which the class is principally traded;
• maintain a transparent regime that requires timely disclosure of repurchases made in reliance on the exemption; and
• reduce regulatory burden by codifying an exemption where issuers previously had to apply for and obtain formal exemptive relief.
(c) Specific Elements of the Selective Repurchase Exemption
(i) Repurchase limit
Issuers would be able to acquire up to 5% of the securities of a class within a 12-month period in reliance on the Selective Repurchase Exemption. The 5% limit is intended to facilitate repurchases of meaningfully sized blocks of securities as desired by issuers while minimizing the potential for undue market impact that could result from the disposition of particularly large blocks. In addition, we believe 5% to be an appropriate threshold having regard to the fact that, in the aggregate, an issuer could potentially repurchase up to 20% of the securities of a class in a given 12-month period by relying on a combination of the Selective Repurchase Exemption, the employee, officer, director, and consultant exemption in section 4.7 of NI 62-104, and the normal course issuer bid (NCIB) exemption in section 4.8 of NI 62-104 (the NCIB Exemption).{2}
(ii) Purchaser and transaction limits
The Selective Repurchase Exemption would allow issuers to acquire securities of their own issue from not more than 5 persons in the aggregate in not more than 5 transactions in the aggregate, in a 12-month period. The 5 person and 5 transaction limit in a 12-month period is intended to provide issuers with flexibility, including the ability to repurchase from a particular person on 5 separate occasions within the 12-month period, while precluding issuers from establishing de facto normal course repurchase programs with select shareholders in parallel with, and potentially in lieu of, NCIBs in reliance on the NCIB Exemption.
(iii) Requirements for discount and liquid market
The Selective Repurchase Exemption would only be available where the value of the consideration paid for any of the securities acquired in reliance on the exemption, including any brokerage fees or commissions, is less than the closing price of the class of securities that is the subject of the bid on the market on which the class is principally traded at the date of the bid. The exemption also requires that a liquid market in the class of securities exists at the date of the bid, the meaning of which is derived from section 1.2 of MI 61-101. Relatedly, the issuer's board of directors must determine that, following the completion of the bid, the market for the class of securities would not reasonably be expected to be materially less liquid than the market that existed at the date of the bid, and that the bid would not reasonably be expected to have a significant negative effect on the market price or value of the class of securities. Collectively, these conditions help to mitigate concerns that a blockholder may be receiving preferential treatment such that the offer should be made to all securityholders, as non-participating securityholders should be able to sell their securities on a stock exchange or other published market at an equal or greater price than the price being received by the blockholder should they wish to do so.
(iv) Disclosure requirements
The Selective Repurchase Exemption also requires that the issuer issue and file a news release after making the bid and before the opening of trading of the market on which the class of securities is principally traded disclosing the details of the transaction and the number or principal amount of securities acquired by the issuer within the preceding 12-month period in reliance on the exemption. Such disclosure provides investors with information that may impact their decisions to acquire, hold, or dispose of securities, and enables the market and securities regulatory authorities to monitor issuers' compliance with the limits of the Selective Repurchase Exemption.
(v) Interaction with other issuer bid exemptions
The 5% limit applies to securities acquired by an issuer within any period of 12 months in reliance on the Selective Repurchase Exemption. Accordingly, securities acquired by an issuer pursuant to a non-exempt issuer bid or in reliance on another exemption in Part 4 of NI 62-104, including the NCIB Exemption, would not reduce the aggregate number or aggregate principal amount of securities that the issuer could acquire in reliance on the Selective Repurchase Exemption. We are of the view that securities acquired by an issuer in reliance on the Selective Repurchase Exemption similarly should not reduce the maximum number of securities that an issuer may acquire in reliance on the NCIB Exemption. As NCIBs are subject to the bylaws, rules, regulations, and policies of designated exchanges, we will engage with the designated exchanges about potential corresponding amendments to their rules or clarifying guidance so that securities acquired in reliance on the Selective Repurchase Exemption do not impact an issuer's use of the NCIB Exemption.
We have proposed amendments to enhance the quality of disclosure in respect of equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer in the particular circumstance of a take-over bid or proxy solicitation for which an information circular is required to be sent. We have also proposed guidance to aid market participants in understanding the disclosure and use of derivatives that we consider to be inappropriate and that can result in regulatory intervention.
(a) Background
In general, equity equivalent derivatives (such as total return swaps and contracts for difference) do not have to be counted for purposes of determining whether an investor has crossed an early warning reporting threshold, unless the investor has the ability, formally or informally, to obtain the voting or equity securities or to direct the voting of securities held by derivative counterparties.
In 2013, the CSA considered amending the early warning system to deem investors to have control or direction over voting or equity securities underlying derivative positions in all circumstances, thereby requiring their inclusion for purposes of determining whether an early warning reporting threshold had been crossed. The CSA determined not to proceed with those amendments following a consideration of concerns raised by commenters. Among other things, commenters submitted that there was no clear evidence to suggest that derivatives are used in Canada as a means to accumulate substantial economic positions in issuers without public disclosure to exert influence over issuers or voting outcomes, and that the inclusion of derivatives would create a significant compliance burden that may render the early warning threshold calculation unduly complex and onerous for investors without providing relevant information to the market.{3}
Although the CSA concluded, in 2014, that it was not appropriate to proceed with the proposal to require the inclusion of equity equivalent derivatives for the purposes of determining whether an early warning reporting obligation had been triggered, the CSA added guidance to NP 62-203 regarding the circumstances in which an investor may have to include in the early warning threshold calculation an equity swap or similar derivative arrangement. The CSA also added enhanced disclosure requirements in EWRs of an investor's economic and voting interests in the class of securities of the reporting issuer to which the EWR relates, including disclosure about the material terms of related financial instruments, securities lending arrangements, and other agreements, arrangements, or understandings that have the effect of altering the acquiror's economic exposure.
In a recent securities regulatory decision,{4} an Alberta Securities Commission panel considered a bidder's use and disclosure of cash settled total return swaps in connection with an unsolicited take-over bid. The panel determined that the bidder had complied with applicable early warning disclosure requirements, but found that the bidder's use and disclosure of the total return swaps, in the specific facts of that matter, was clearly abusive of both the capital markets and the target's securityholders.
In 2022, the U.S. Securities and Exchange Commission (SEC) proposed amendments to the U.S. beneficial ownership reporting regime that, in part and subject to conditions, would have deemed holders of certain cash settled derivatives as beneficial owners of the reference securities for the purposes of that regime, including for determination of the reporting trigger.{5} The SEC received a number of comments indicating that the proposal would add needed market transparency that, among other things, would allow securityholders to better assess whether to support or oppose activists' proposals.{6} However, the SEC did not adopt this aggregation proposal, citing several commenters' objections including a lack of evidence as to whether there was an actual problem in the marketplace to be solved, that the proposal was overly broad and would be difficult to administer, and that compliance would be complex, as well as concerns on the part of some commenters that the proposal could inhibit activist investment strategies.{7} The SEC instead chose to adopt a guidance-based approach noting that whether the holder of any cash-settled derivative security is the beneficial owner of the reference covered class ultimately will depend on the relevant facts and circumstances.{8} While the SEC adopted other changes to the U.S. beneficial ownership reporting regime, it did so noting that those changes were not intended to discourage activism, but rather to ensure that investors receive material information in a timely manner while maintaining an appropriate balance between issuers of securities and the shareholders who seek to exert influence or control over issuers.{9}
(b) Policy Rationale for Proposed Amendments and Proposed Changes
(i) Consideration of aggregation of beneficial ownership and economic interests
We have considered whether the securities regulatory approach concerning the treatment of equity equivalent derivatives ought to be adjusted in light of the established use of derivatives in investment strategies, changing market conditions, concerns about possible misuse of equity equivalent derivatives, varied international regulatory approaches to aggregation and disclosure of derivatives, and the existing discrepancies in the scope and transparency of disclosure of beneficial ownership and economic interests during take-over bids and proxy solicitation campaigns.
We recognize that derivatives can potentially give rise to unique activities in the context of a take-over bid or matter subject to securityholder approval, including hidden ownership{10}, empty tendering{11}, empty voting{12}, and "parking"{13}. In general, concerns that could arise in connection with those activities are substantially mitigated through compliance with the existing early warning system and related guidance concerning deemed beneficial ownership of, or control or direction over, the reference voting or equity securities. We also do not have evidence that derivatives are being used inappropriately or abusively with any regularity in our capital markets. As a result, we do not think that it is appropriate to alter the early warning system to require aggregation of beneficial ownership and economic interests for the purposes of calculating the early warning reporting triggers. Although other jurisdictions around the world require aggregation of beneficial ownership and economic interests,{14} we think that approach could impose a disproportionate burden relative to potential concerns, particularly in the absence of clear evidence to suggest that derivatives are being used in a manner contrary to the purposes of Canadian securities laws.
(ii) New disclosure requirements in specified circumstances
Based on our review, we think that disclosure of bidders' and soliciting securityholders' aggregate economic positions (i.e., a combination of beneficial ownership and economic interests in related financial instruments and other agreements, arrangements, or understandings that have the effect of altering economic exposure to the issuer) in the context of take-over bids and proxy solicitations for which an information circular is required to be sent will support confidence in our capital markets by providing more balanced transparency of the totality of parties' interests in special circumstances where securityholders are induced to make tendering or voting decisions.
There is currently an asymmetry of information concerning the aggregate economic position of a bidder or soliciting securityholder when a take-over bid or proxy solicitation for which an information circular is required to be sent, as applicable, is commenced. Insiders of reporting issuers are required to disclose their aggregate economic positions in accordance with insider reporting obligations; however, there is no express comparable requirement for bidders or soliciting securityholders who are not insiders to disclose their aggregate economic positions in an information circular or otherwise. Bidders and soliciting securityholders who have an interest in equity equivalent derivatives will, themselves, be aware of the existence, terms, and duration of those agreements, as well as the possibility that the counterparties may have hedged their positions by acquiring the reference securities. In a take-over bid or contest for control, that information is material to a securityholder's understanding in order to:
• evaluate whether such interests are pertinent to the bidder or soliciting securityholder's influence and leverage in the determination of the matter;
• understand that any securities underlying equity equivalent derivatives held by the bidder or soliciting securityholder are subject to counterparty tendering and voting practices; and
• assess the viability of success of the bid or solicitation and potential alternative options.
We recognize that take-over bids and shareholder activism can serve as accountability mechanisms in our capital markets, and are mindful that any new disclosure requirements could potentially have unintended impacts on bidders and activists. We are not proposing to require real-time disclosure of accumulations of equity equivalent derivatives during stake-building in anticipation of a bid or proxy solicitation, or that any new disclosure of such interests be required for proxy solicitations made in reliance on the "quiet solicitation" or "public broadcast" exemptions.{15} Rather, the proposed new disclosure requirements related to equity equivalent derivatives would apply only when there is a formal, public overture for control. We think this represents a relatively minimal intrusion into take-over bids and shareholder activism, and one which maintains an appropriate balance between issuers of securities and investors who seek to exert influence or control over issuers.
(A) Specific Elements of Proposed Amendments
We have proposed amendments to NI 62-104, Form 62-104F1 Take-Over Bid Circular (Form 62-104F1), NI 51-102, and Form 51-102F5 Information Circular (Form 51-102F5) to enhance the quality of disclosure in respect of equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer in the context of take-over bids and proxy solicitations made other than by or on behalf of management of an issuer for which an information circular is required to be sent.
The proposed "equity equivalent derivative" concept is substantially similar to the one proposed by the CSA in 2013, modified to reflect that a combination of derivatives, taken together, can provide economic exposure that substantially replicates the economic consequences of ownership. We would generally consider a derivative or combination of derivatives to substantially replicate the economic interest of owning a reference security if it provides a rate of return between 90% and 110% of the rate of return of the reference security and have proposed guidance to this effect in section 3.1 of NP 62-203. A cash settled equity total return swap or substantially similar derivative would come within our proposed definition of "equity equivalent derivative".
In the case of bidders, we have proposed the following:
• The addition of Item 8.1 to Form 62-104F1 to require prescribed disclosure in a take-over bid circular if the offeror, or any person acting jointly or in concert with the offeror (i) has, or had at any time during the 6-month period preceding the date of the take-over bid, an interest in, or right or obligation associated with, a related financial instrument involving a voting or equity security of the offeree issuer, including an equity equivalent derivative, or (ii) is a party, or has been a party at any time during the 6-month period preceding the date of the take-over bid, to any agreement, arrangement, or understanding that has or had the effect of altering, directly or indirectly, the economic exposure of the offeror or the person acting jointly or in concert with the offeror to the offeree issuer and disclosure is not otherwise required by (i) above. The purpose of the 6-month look-back disclosure in proposed Item 8.1, which is analogous to existing Item 7 of Form 62-104F1 requiring disclosure of trading in securities of the offeree issuer in the previous 6 months, is to provide enhanced transparency of trading activities that may have improperly impacted the price of the offeree issuer's securities in the period preceding a take-over bid.{16}
• The addition of section 2.7.1 to NI 62-104 to require an offeror to issue and file a news release containing prescribed disclosure before the opening of trading on the business day following the relevant action if, during the pendency of a take-over bid, an offeror (i) acquires or disposes of an interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the offeree issuer, including an equity equivalent derivative, or there is a change in an offeror's interest in, or right or obligation associated with, the related financial instrument, or (ii) enters into, terminates, or amends an agreement, arrangement, or understanding that has the effect of altering the offeror's economic exposure to the offeree issuer and disclosure is not otherwise required by (i) above.
• The requirement in paragraphs 2.7.1(1)(c) and 2.7.1(2)(b) of NI 62-104 and Items 8.1(1)(d) and 8.1(2)(c) of Form 62-104F1 to describe any past or present relationship between the offeror or any joint actor and a counterparty, or an affiliate of the counterparty, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of, or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect. We have also proposed guidance in section 3.1 of NP 62-203 relating to relationships for which disclosure would be required.
In the case of soliciting securityholders, we have proposed the following:
• The addition of subsection 5.1(6) to NI 62-104 to deem an acquiror or a person acting jointly or in concert with the acquiror, for the purposes of sections 5.2 and 5.4 of NI 62-104 and only during the pendency of a proxy solicitation campaign, to have acquired, and to have, control or direction over a security, including an unissued security, if the acquiror or the person acting jointly or in concert with the acquiror is a counterparty to an equity equivalent derivative of the security. The purpose of this deeming provision is to require, by application of the early warning system, disclosure of changes in a soliciting securityholder's aggregate economic position, whether through beneficial ownership of securities or through economic interests in equity equivalent derivatives, subsequent to the filing of its proxy circular in circumstances where its aggregate economic position is equivalent to a beneficial ownership position of 10% or more of the outstanding securities of the class.
• The addition of Items 6.6, 6.7, and 6.8 to Form 51-102F5, which apply to a solicitation made other than by or on behalf of management of a company, to require prescribed disclosure in an information circular of certain persons' or companies' (i) beneficial ownership of, or control or direction over, voting securities of the company, (ii) interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the company, including an equity equivalent derivative, and (iii) agreements, arrangements, or understandings that have the effect of altering, directly or indirectly, the persons' or companies' economic exposure to the company and disclosure is not otherwise required by (ii) above.
• Amendments to subparagraph 9.2(4)(c)(ii) of NI 51-102 to require a person or company soliciting proxies in reliance on the public broadcast, speech, or publication exemption in subsection 9.2(4) of NI 51-102 to provide prescribed disclosure of certain persons' or companies' beneficial ownership of, or control or direction over, voting securities of the company.
• The requirement in Items 6.7(d) and 6.8(c) of Form 51-102F5 to describe any past or present relationship between a person or company referred to in Item 6.6 of Form 51-102F5 and a counterparty, or an affiliate of the counterparty, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the company, or, if there is no such relationship, a statement to that effect. We have also proposed guidance in section 9.4 of 51-102CP regarding relationships for which disclosure would be required.
(iii) New guidance on disclosure and use of derivatives
We have proposed guidance in section 3.1 of NP 62-203 and section 9.4 of 51-102CP to aid market participants in understanding the requirements applicable to equity equivalent derivatives. In particular, the proposed guidance affirms that we expect equity equivalent derivatives to be disclosed in compliance with securities laws, having regard to circumstances where beneficial ownership of, or control or direction over, reference securities may be deemed. The proposed guidance also indicates that the disclosure or use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage securities regulatory authorities' public interest jurisdiction. For example, we may have public interest concerns where investors do not clearly and accurately differentiate between beneficial ownership of securities and economic interests in their public disclosures and instead express them as an aggregate economic interest, which can generate confusion in the market. We may also have public interest concerns where equity equivalent derivatives are used in a deliberate effort to accumulate substantial economic positions in an issuer if the holder seeks to influence the outcome of a potential take-over bid or matter subject to securityholder approval by either exerting pressure on a counterparty or communicating expectations of commercial incentives or disincentives for the counterparty or its affiliates dependent on how or when the counterparty acquires, disposes of, or votes securities of the offeree issuer.
In 2016, the CSA adopted certain amendments to the early warning system, including requiring more detailed information regarding the purpose of the transaction that triggered the filing of an EWR and the plans or future intentions of the acquiror or a joint actor which relate to certain enumerated actions including, but not limited to, the acquisition or disposition of additional securities, a corporate transaction, a change in the board of directors or management, or a solicitation of proxies. However, we have found that: (i) disclosure regarding acquirors' plans or future intentions in EWRs often consists of broad, boilerplate language; (ii) acquirors often rely on such broad language as a basis for not filing updated EWRs when there have been more particular changes to their intentions, or when they have taken specific actions; and (iii) it is market practice for acquirors to file updated EWRs only upon entering into a definitive agreement in respect of the issuer or its securities.
We have proposed guidance in section 3.3 of NP 62-203 to clarify our expectations regarding disclosure of the plans or future intentions of an acquiror or a joint actor, including that:
• an acquiror should re-assess the accuracy of the disclosure in its most recent EWR in respect of the plans or future intentions of the acquiror and any joint actor every time that the requirement to file an EWR is triggered;
• although the CSA generally considers that a change in plans or future intentions will occur at the latest upon the execution of a definitive agreement to enter into a transaction, the commencement of a take-over bid, or the public announcement of a proxy solicitation, as applicable, an acquiror should update the disclosure in its most recent EWR as soon as a change in plans or future intentions occurs or if the acquiror or any joint actor has taken irrevocable steps to effect a potential transaction, even if the acquiror's most recent EWR contains general language reserving the right to take any of the actions enumerated in Item 5 of Form 62-103F1 Required Disclosure Under the Early Warning Requirements (Form 62-103F1); and
• significant steps by an acquiror or any joint actor with respect to a particular transaction or event may, individually or taken together, constitute a change in the plans or future intentions disclosed in the acquiror's most recent EWR.
We have proposed targeted amendments to the early warning system to clarify existing requirements and address potential gaps. We have also proposed additional guidance to NP 62-203 to aid market participants in understanding their reporting obligations. Specifically, the Proposed Amendments and the Proposed Changes:
• specify that an EWR is required to be filed by a person who had beneficial ownership of, or control or direction over, 10% or more of the outstanding voting or equity securities of a class prior to, and immediately following, an issuer becoming a reporting issuer;
• address a gap in NI 62-104 such that an acquisition or disposition of beneficial ownership of, or control or direction over, securities of a class following the formation or cessation of a joint actor relationship is no longer required for a reporting obligation to arise under the early warning system;
• clarify the trigger for the filing of subsequent reports under both the early warning system and the alternative monthly reporting system (AMR system) in various contexts, including following an issuer action and during the pendency of a non-exempt take-over bid or issuer bid;
• permit an eligible institutional investor (an EII) that is not filing alternative monthly reports (AMR) under the AMR system to enter or re-enter the AMR system; and
• clarify how the early warning reporting thresholds are to be calculated.
(a) Deemed Acquisitions -- Securities of a Previously Non-Reporting Issuer
EWRs and associated news releases typically are not issued and filed, as applicable, by persons who have beneficial ownership of, or control or direction over, 10% or more of the outstanding voting or equity securities of a class immediately upon an issuer becoming a reporting issuer. In general, stakeholders have interpreted that these EWR filings are not required on the basis that an existing security holder has not acquired beneficial ownership of, or control or direction over, voting or equity securities solely as a result of an issuer becoming a reporting issuer.
We do not believe that initial disclosure of a 10% or greater ownership position in a filing statement, prospectus, or information circular is an adequate substitute for the more complete information mandated under the early warning requirements. In addition, the requirement in subsection 5.2(2) of NI 62-104 to update early warning filings is premised upon the prior filing of an initial report. This current drafting may enable securityholders to avoid disclosure of dispositions of securities, or changes in a material fact regarding their investment intentions, on the basis that they do not have an initial EWR that requires updating. Accordingly, we have proposed adding subsection 5.1(3) to NI 62-104 to deem securities beneficially owned, or over which control or direction is exercised, by a person at the time that an issuer becomes a reporting issuer to have been acquired by the person at that time for the purposes of Part 5 of NI 62-104.
However, we are of the view that requiring the issuance and filing of a news release in connection with this deemed acquisition would increase regulatory burden without providing a corresponding benefit to the market. We also do not believe that the imposition of the moratorium provisions is warranted in such circumstances. Accordingly, we have proposed adding subsections 5.2(5) and 5.3(3) to NI 62-104 to clarify that the news release requirement and moratorium provisions, respectively, do not apply in these circumstances.
(b) Deemed Acquisitions -- Securities of Joint Actors
In a recent securities regulatory decision,{17} a British Columbia Securities Commission panel noted that, if parties are acting jointly or in concert, the early warning requirements are triggered only when, as a result of a subsequent acquisition by one of the joint actors, the joint actors collectively hold 10% or more of the outstanding voting or equity securities of any class (i.e., no filing is required upon the formation of a joint actor relationship among persons who would, together with the other joint actors, have beneficial ownership of, or control or direction over, 10% or more of the class as long as each joint actor is below the 10% threshold on an individual basis).
One of the policy rationales for the early warning system is to alert the market of the identity of holders of 10% or more of a class of an issuer's outstanding voting or equity securities because such information may be material information to investors given the potential that such persons can affect the outcome of control transactions, the composition of the reporting issuer's board of directors, and the approval of significant proposals and transactions. We believe that policy purpose is equally engaged when 2 or more securityholders who are acting jointly or in concert collectively hold 10% or more of a class of an issuer's outstanding voting or equity securities even where each is individually below the 10% threshold. Accordingly, we have proposed adding subsection 5.1(4) to NI 62-104 to deem each person acting jointly or in concert with other persons in respect of an issuer to have acquired the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by such other persons when they began acting jointly or in concert with each other. We have also proposed adding subsection 5.1(5) to NI 62-104 to deem each person that ceases acting jointly or in concert with other persons in respect of an issuer to have disposed of the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by such other persons when they cease acting jointly or in concert with each other.
Subsections 5.1(4) and (5) of NI 62-104 only apply to Part 5 of NI 62-104. It is not intended that the crystallization of a joint actor relationship where the joint actors collectively own or control 20% or more of the outstanding securities of the class would constitute a take-over bid in the absence of a subsequent acquisition by one or more of the joint actors.
(c) Trigger for Subsequent Filings
We have proposed amendments to certain provisions in NI 62-103 and NI 62-104 and guidance in NP 62-203 related to the trigger for subsequent filings under the early warning system and the AMR system. In particular, we have proposed:
• amending paragraph 5.2(2)(a) of NI 62-104 and adding the defined term "securityholding percentage" to subsection 5.1(1) of NI 62-104 to clarify that the requirement to file a subsequent EWR is to be assessed on the basis of a 2% or more change in the acquiror's post-event percentage ownership of the outstanding securities of the particular class relative to the percentage ownership that the acquiror reported in its most recent EWR;
• amending paragraph 4.5(c) of NI 62-103 and adding guidance in section 3.8 of NP 62-203 to clarify that EIIs are required to file an AMR upon crossing fixed 2.5% thresholds in excess of 10% (e.g., 12.5%, 15%, 17.5%, etc.);{18}
• guidance in section 3.9 of NP 62-203, including illustrative examples, to clarify the issuer actions exemption in section 6.1 of NI 62-103; and
• guidance in section 3.4 of NP 62-203 to clarify that EIIs that are exempt from the early warning requirements under section 4.1 of NI 62-103 are not exempt from the requirement to issue and file a news release under section 5.4 of NI 62-104 in connection with acquisitions during a non-exempt take-over bid or issuer bid.
(d) Entry or Re-Entry into the AMR System
We have received inquiries regarding whether EIIs that become disqualified from the AMR system pursuant to section 4.2 of NI 62-103 are able to rely on the AMR system once the circumstances surrounding the disqualification (i.e., the formal bid, the business combination, or the proxy solicitation) have ended, ceased, or are no longer present, and how they would go about re-entering the AMR system. We have proposed adding subsection 4.3(5) to NI 62-103 to permit an EII that is not filing reports under the AMR system to enter or re-enter the AMR system, provided that the EII promptly issues and files a news release that includes a statement that the EII is eligible to file reports under the AMR system and that it intends to do so for the reporting issuer, and subsequently files a report in accordance with paragraph 4.5(a) of NI 62-103.
(e) Early Warning Reporting Calculations
We have received inquiries in respect of how the early warning reporting thresholds are to be calculated and, in particular, whether the acquisition of beneficial ownership of, or control or direction over, securities convertible into voting or equity securities of a reporting issuer that are not convertible within 60 days from the date on which they are acquired need to be included as part of the numerator when determining whether the early warning requirements have been triggered. We have proposed guidance in sections 3.6 and 3.7 of NP 62-203, including illustrative examples, to clarify these calculations.
We have proposed amendments that relate to exemptions from the take-over bid and issuer bid regimes, including to:
• remove the exemption from the take-over bid requirements in subsection 2.2(3) of NI 62-104 that permits offerors to make market purchases of up to 5% of the outstanding securities of the class subject to the take-over bid during the pendency of the bid (the 5% Market Purchase Exemption);
• expand the availability of exemptions from the take-over bid and issuer bid regimes in respect of non-reporting issuers;
• allow issuers to extend "Dutch auction" issuer bids without first taking up securities if certain conditions are satisfied;
• facilitate issuer bids that provide securityholders with the option to maintain their proportionate interest in the issuer following completion of the bid; and
• allow issuers to repurchase, redeem, or otherwise acquire securities that are convertible into securities of the class subject to an issuer bid in reliance on paragraph 4.6(a), (b), or (c) of NI 62-104.
(a) Removing the 5% Market Purchase Exemption
The policy basis for the 5% Market Purchase Exemption is to promote liquidity in the target issuer's securities, provide all target securityholders with an equal opportunity to sell their securities in the target issuer prior to the conclusion of the take-over bid, raise the market price of the securities, and encourage bidders to raise their offer prices.{19} However, the 5% Market Purchase Exemption has been criticized for being of limited merit and having the potential to be utilized abusively by bidders to thwart competing bids, particularly after the amendments to the take-over bid regime made in 2016.
The take-over bid regime includes a non-waivable 50% minimum tender requirement, which calculation excludes the securities of the target issuer held by the bidder and its joint actors (including any securities of the target issuer acquired pursuant to the 5% Market Purchase Exemption). Accordingly, purchases of the target issuer's securities pursuant to the 5% Market Purchase Exemption do not assist a bidder in satisfying the minimum tender requirement. Moreover, the 5% Market Purchase Exemption could potentially be used tactically by bidders to limit the number of securities available on the market for a competing bidder and thwart a competing bid that would also be subject to the 50% minimum tender requirement.
We have received feedback that liquidity seldom seems to be a concern during the pendency of a take-over bid, and that the market price of a target issuer's securities is more likely to be driven by the market's assessment of the prospects for the success or failure of the bid or the potential for a friendly acquiror to emerge. Additionally, for the period between January 1, 2021 and December 31, 2023, we only identified one instance where a bidder issued and filed news releases relating to use of the 5% Market Purchase Exemption.
Given the potential for the 5% Market Purchase Exemption to be used in a manner that frustrates an open take-over bid process, and in light of its infrequent use, we do not believe that there is a compelling policy basis to retain the 5% Market Purchase Exemption and have proposed removing it.
(b) The Non-Reporting Issuer Exemptions from the Take-Over Bid and Issuer Bid Requirements
Section 4.3 of NI 62-104 (the NRI TOB Exemption) provides an exemption from the take-over bid requirements where: (i) the target issuer is not a reporting issuer; (ii) there is no published market for the target issuer's securities; and (iii) the target issuer has 50 or fewer securityholders, exclusive of current or former employees of the target issuer or one of its affiliates (the Maximum Securityholder Condition, and such employees, the Qualifying Persons). The policy rationale for the NRI TOB Exemption is that the cost of complying with the take-over bid requirements outweighs the benefits where the bid is made for a private company with relatively few securityholders, particularly given that private companies often have security transfer restrictions that prevent the types of concerns that are addressed by take-over bid regulation, and because private company securityholders can be expected to have access to the kind of information that would be provided in a bid circular. There is a corresponding exemption from the issuer bid requirements for non-reporting issuers in section 4.9 of NI 62-104 (the NRI Issuer Bid Exemption).
From time to time, we have received applications for exemptive relief, primarily from bidders seeking relief from the take-over bid requirements but also from issuers seeking relief from the issuer bid requirements, in circumstances where the subject issuer does not satisfy the Maximum Securityholder Condition. Relief has been granted in circumstances where the facts support the subject issuer being a closely-held, non-reporting issuer despite not being able to satisfy the Maximum Securityholder Condition, but generally only when the subject issuer exceeds the Maximum Securityholder Condition by fewer than 5 additional beneficial securityholders after allowing for certain additional categories of persons to be excluded for the purposes of calculating the Maximum Securityholder Condition. These additional categories have consisted of persons considered by the CSA to be in a similar position to employees and who have been viewed as akin to employees in other contexts,{20} such as officers, directors, contractors, and consultants (collectively, the Employee Adjacent Persons), and also to spouses of Qualifying Persons or Employee Adjacent Persons where the Qualifying Person or Employee Adjacent Person has control or direction over the subject issuer's securities that are beneficially owned by the spouse. We have proposed amending the NRI TOB Exemption and the NRI Issuer Bid Exemption to codify these additional categories.
(c) Modified Dutch Auction Issuer Bids -- Extension Take Up Requirement
Some issuer bids are conducted pursuant to a modified "Dutch auction" process where, generally, the issuer sets a maximum dollar amount of its own securities that it wishes to repurchase (the Bid Amount) and a range of prices within which securityholders may elect to tender their securities. The issuer will determine a single purchase price payable per security (the Determined Purchase Price) at which tendered securities will be taken up, taking into account the number of securities tendered and the prices at which securityholders have elected to tender their securities. The Determined Purchase Price will be the lowest price per security that allows the issuer to purchase the greatest number of securities validly tendered and not withdrawn having an aggregate value not exceeding the Bid Amount.
Subsection 2.32(4) of NI 62-104 (the Extension Take Up Requirement) provides that an issuer must not extend its issuer bid if all the terms and conditions of the bid have been complied with or waived, unless the issuer first takes up all securities deposited under the bid and not withdrawn. The Extension Take Up Requirement serves to ensure that, if a bid is made and the terms and conditions of the bid are satisfied or waived, securityholders can expect that the securities that they have deposited will be taken up and paid for. However, the mechanics of modified "Dutch auction" issuer bids render compliance with the Extension Take Up Requirement problematic, as securities tendered during any extension period and the prices at which they are tendered will influence the Determined Purchase Price and the proportion of tendered securities that will be purchased.
We have granted relief from the Extension Take Up Requirement to accommodate the mechanics of modified "Dutch auction" issuer bids when issuers have applied for such relief, and have proposed adding subsection 2.32(4.1) to NI 62-104 to codify this exemption. The exemption would result in securityholders who initially tendered to the bid having to wait until the expiry of the extension period for their securities to be taken up and paid for. There are circumstances where we do not believe that it is appropriate for securityholders to be prejudiced by this delay in take up and payment, such as when: (i) the bid is not undersubscribed, as any extension would only serve to result in fewer securities of a tendering securityholder (on a proportionate basis) being taken up and lowering the Determined Purchase Price; or (ii) the market price of the securities is greater than the highest price per security offered by the issuer, as there would be no reasonable prospect that the issuer should receive more tenders. We have proposed adding paragraphs (b) and (c), respectively, to subsection 2.32(4.1) to address these issues.
(d) Issuer Bids -- Proportionate Tenders
Subsection 2.26(1) of NI 62-104 (the Proportionate Take Up Requirement) provides that, if an issuer bid is made for less than all of the class of securities subject to the bid and a greater number of securities are deposited than the issuer has sought to acquire, the issuer must take up and pay for the securities proportionately, according to the number of securities deposited by each securityholder.
Some modified "Dutch auction" issuer bids have included a proportionate tender option whereby securityholders can elect to sell to the issuer, at the Determined Purchase Price, a number of securities that will result in the securityholder maintaining their proportionate interest in the issuer following completion of the bid (a Proportionate Tender). However, unless all outstanding securities are tendered to the bid, fewer than the proportionate number of securities tendered through a Proportionate Tender will be taken up and paid for, and accordingly, absent exemptive relief, the inclusion of a Proportionate Tender option is not permissible.{21}
The purpose of the Proportionate Take Up Requirement is to ensure that all tendering securityholders are treated equally. If an issuer conducting an issuer bid chooses to allow securityholders to make a Proportionate Tender, such an option would have to be made available to every securityholder, thereby eliminating concerns related to equal treatment. Accordingly, we have proposed adding subsection (3.1) to section 2.26 of NI 62-104 to codify the exemptive relief that we have been granting to facilitate Proportionate Tenders. We do not see a basis to limit the ability to elect to make a Proportionate Tender to modified "Dutch auction" issuer bids, so have not drafted the exemption on that basis.
(e) Issuer Bids -- Acquisition of Convertible Securities during an Issuer Bid
Subsection 2.3(1) of NI 62-104 prohibits an issuer from acquiring, or making or entering into an agreement, commitment or understanding to acquire, beneficial ownership of securities of the class that are subject to an issuer bid, or securities that are convertible into securities of that class, otherwise than under the bid. Subsection 2.3(2) of NI 62-104 provides that an issuer is not prevented from purchasing, redeeming, or otherwise acquiring any securities of the class subject to the bid in reliance on an exemption in paragraph 4.6(a), (b), or (c) of NI 62-104. However, subsection 2.3(2) does not permit an issuer to purchase, redeem, or otherwise acquire securities that are convertible into securities of the class subject to the bid in reliance on an exemption in paragraph 4.6(a), (b), or (c). We believe that it is appropriate for issuers to be able to repurchase, redeem, or otherwise acquire securities that are convertible into securities of the class subject to the bid, as well as securities of the class subject to the bid, in reliance on paragraph 4.6(a), (b), or (c), and have proposed amending subsection 2.3(2) of NI 62-104 to expand the exemption accordingly.
(a) Settlement Period
On May 27, 2024, the settlement period for securities trades in Canada moved from a transaction date plus 2 business day settlement cycle to a transaction date plus one business day settlement cycle. The settlement cycle and take-over bid and issuer bid tendering process payment periods historically have not been linked. We had been advised that it generally takes up to 3 days for an offeror's designated depositary to coordinate payment to registered holders whose securities are taken up after it receives the necessary funds from the offeror. However, we are in favour of securityholders receiving payment for their taken up securities on a more timely basis, if practicable. Accordingly, we have proposed amending paragraph 2.30(1)(c), subparagraph 2.31.1(b)(iv), and subsections 2.32(2) and 2.32.1(2) of NI 62-104 to replace references to "3 business days" with "promptly", and proposed guidance in section 2.19 of NP 62-203 to clarify our view that "promptly" should be interpreted on the basis of the practices of the financial community, including settlement practices, applicable at the relevant time.
(b) Guidance
We have proposed guidance in NP 62-203 with respect to various issues about which we have frequently received inquiries or that address market developments, including:
• in section 2.4.1, to clarify that conditions to take-over bids may engage securities regulatory authorities' public interest jurisdiction in certain circumstances;
• in section 2.18, to clarify that certain policies underlying the take-over bid regime are also applicable in the context of a mini-tender offer, and describe circumstances when securities regulators may intervene in respect of a mini-tender offer;
• in section 2.20, to explain how the "date of the bid" is to be determined for purposes of certain exemptions from the take-over bid and issuer bid requirements;
• in section 2.21, to clarify that we retain public interest jurisdiction over offshore repurchases of securities; and
• in section 3.5, to clarify that the concept of acting jointly or in concert applies to proxy solicitation for the purpose of voting on an alternative slate of directors, even in the absence of a take-over bid or issuer bid.
The Consequential Amendments amend the references to NI 62-104 in each of MI 13-102, NI 43-101, NI 44-102, MI 51-105, and MI 61-101 to reflect the proposed amendment to the title of NI 62-104. The Consequential Changes change the references to NI 62-104 in each of 55-104CP and 61-101CP to reflect the proposed amendment to the title of NI 62-104.
Annex M is being published in any local jurisdiction that is making related changes to local securities laws, including local notices or other policy instruments in that jurisdiction. It also includes any additional information that is relevant to that jurisdiction only.
We welcome your comments on the Proposed Amendments and the Proposed Changes. In addition to any general comments you may have, we also invite comments on the following specific questions.
1. One of the conditions of the Selective Repurchase Exemption is that the aggregate number of securities or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer within any period of 12 months in reliance on the Selective Repurchase Exemption does not exceed 5% of the securities of that class outstanding at the beginning of the 12-month period. Please comment on the appropriateness of this condition. If you are of the view that a different threshold would be more appropriate, please explain why.
2. One of the conditions of the Selective Repurchase Exemption is that securities must be acquired from not more than 5 persons in the aggregate and in not more than 5 transactions in the aggregate, within any period of 12 months. Please comment on the appropriateness of this condition. If you are of the view that a different threshold would be more appropriate, please explain why.
3. One of the conditions of the Selective Repurchase Exemption is that a liquid market in the class of securities that is the subject of the bid exists at the date of the bid, determined in accordance with proposed section 1.12 of NI 62-104, which is derived from section 1.2 of MI 61-101. Section 1.12 includes, among other things, a requirement that the aggregate value of the trades in securities of the class on the published market on which the class was principally traded was at least $15,000,000 and that the market value of the class of securities on the published market on which the class was principally traded was at least $75,000,000. Based on available data, approximately 75% of issuers listed on the Toronto Stock Exchange and less than 10% of issuers listed on the TSX Venture Exchange would satisfy the liquid market criteria. Does proposed section 1.12 of NI 62-104 strike an appropriate balance between ensuring that there is sufficient liquidity to enable securityholders who do not participate in the bid to dispose of their securities in the market without unduly limiting the availability of the Selective Repurchase Exemption? If not, what criteria and/or thresholds would be more appropriate?
4. Should the news release that the issuer is required to issue and file following the making of the bid include any additional information, and if so, what?
5. Is it appropriate for the value of the consideration paid by the issuer for any securities repurchased to be determined with reference to an unaffected closing price, or should the consideration be determined on the basis of the closing price of the class of subject securities following an announcement of the bid?
6. Do you agree that purchases made in reliance on the Selective Repurchase Exemption should not reduce the maximum number of securities that an issuer may acquire in reliance on the NCIB Exemption?
7. Do you expect that the Selective Repurchase Exemption will: (a) curtail repurchases by issuers pursuant to formal issuer bids or NCIBs; or (b) have any negative impact on liquidity in the relevant class of securities?
8. Should the availability of the Selective Repurchase Exemption be limited to issuers with operative NCIBs? If so, should such issuers have repurchased a minimum number of securities under such NCIBs as at the date of the bid? If so, what minimum amount of repurchases would be appropriate and why?
9. Are there foreseeable challenges, practical or otherwise, for issuers who may wish to rely on the Selective Repurchase Exemption? If so, please also explain whether and how they may be addressed or mitigated.
10. Are there foreseeable unintended consequences of the Selective Repurchase Exemption or ways in which the Selective Repurchase Exemption could be misused?
11. Do you think that the Selective Repurchase Exemption may give rise to concerns related to "greenmail"?{22} If so, do you think that the 5% repurchase limit helps to mitigate such concerns?
12. Do you agree with the proposed "equity equivalent derivative" concept, as set out in the definition and its associated guidance? If not, what changes would you suggest?
13. Do you agree with the proposal to require disclosure of equity equivalent derivatives during a take-over bid and proxy solicitation for which an information circular is required? Why or why not?
14. Would the proposed new disclosure requirements referenced in question 13 have unintended consequences, such as impacting the number or quality of take-over bids or proxy solicitation campaigns?
15. While the proposed new disclosure requirements referenced in question 13 would not be triggered until a person or company is required to prepare and send a take-over bid or information circular, prospective bidders or activists may enter into equity equivalent derivative transactions prior to that time. Should a person or company soliciting proxies in reliance on the public broadcast, speech, or publication exemption in subsection 9.2(4) of NI 51-102 be required to provide the disclosure contemplated by proposed new Items 6.7 and 6.8 of Form 51-102F5?
16. Given that Item 7 of Form 62-104F1 requires that a take-over bid circular include disclosure about any securities of the offeree issuer purchased or sold by certain persons during the 6-month period preceding the date of the take-over bid, do you agree with the proposed requirement in Item 8.1 of Form 62-104F1 that a take-over bid circular include disclosure about related financial instruments and other agreements, arrangements or understandings that have or had the effect of altering economic exposure to the offeree issuer during the 6-month period preceding the date of the bid? Why or why not?
17. Subsection 5.1(3) of NI 62-104 would deem securities beneficially owned, or over which control or direction is exercised, by a person at the time that an issuer becomes a reporting issuer to have been acquired by the person at that time for the purposes of Part 5 of NI 62-104. Please comment on the appropriateness and potential impact of this proposed provision.
18. Subsection 5.1(4) of NI 62-104 would deem each person acting jointly or in concert with other persons in respect of an issuer to have acquired the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by such other persons when they began acting jointly or in concert with each other. Relatedly, subsection 5.1(5) would deem each person that ceases acting jointly or in concert with other persons in respect of an issuer to have disposed of the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by such other persons when they ceased acting jointly or in concert with each other. Please comment on the appropriateness of these proposed provisions and any foreseeable concerns with its interpretation and/or enforceability.
19. Are there any other categories of persons that should be excluded for the purposes of calculating the Maximum Securityholder Condition?
20. After the inclusion of the additional categories proposed, should the Maximum Securityholder Condition be further increased beyond 50? If so, what should it be increased to and why?
21. Should the tendering process payment period be changed from a maximum of 3 business days to a maximum of one business day to align with the settlement cycle for securities trades?
22. Are there any practical impediments or challenges to shortening the tendering process payment period from the current 3 business day maximum? If so, please explain.
Please submit your comments in writing on or before August 12, 2026.
Address your submission to all of the CSA as follows:
Submit your comments here: https://www.securities-administrators.ca/consultations/. Your comments will be distributed to the participating CSA members.
If Québec is a participating jurisdiction, and you are submitting your comments through the link above, you are also submitting your comments to:
We cannot keep submissions confidential because securities legislation in certain provinces requires publication of the written comments received during the comment period. Comments received will be posted on the websites of each of the Alberta Securities Commission at www.albertasecurities.com, the Autorité des marchés financiers at www.lautorite.qc.ca and the Ontario Securities Commission at www.osc.gov.on.ca. Therefore, you should not include personal information directly in comments to be published. It is important that you state on whose behalf you are making the submission.
Annex A |
Proposed Amendments to NI 62-104 |
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Annex B |
Proposed Amendments to NI 62-103 |
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Annex C |
Proposed Amendments to NI 51-102 |
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Annex D |
Proposed Changes to NP 62-203 |
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Annex E |
Proposed Changes to 51-102CP |
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Annex F |
Proposed Amendments to MI 13-102 |
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Annex G |
Proposed Amendments to NI 43-101 |
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Annex H |
Proposed Amendments to NI 44-102 |
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Annex I |
Proposed Amendments to MI 51-105 |
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Annex J |
Proposed Amendments to MI 61-101 |
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Annex K |
Proposed Changes to 55-104CP |
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Annex L |
Proposed Changes to 61-101CP |
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Annex M |
Local Matters |
Please refer your questions to any of the following:
Ontario Securities Commission |
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Adeline Lee |
Jordan Lavi |
Senior Legal Counsel, Corporate Finance |
Senior Legal Counsel, Corporate Finance |
416-595-8945 |
416-593-2354 |
alee@osc.ca |
jlavi@osc.ca |
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Autorité des marchés financiers |
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Charlotte Verdebout |
Déborah Koualé-Bénimé |
Senior Policy Advisor, Regulatory Policy |
Senior Policy Advisor, Regulatory Policy |
514-395-0337 ext. 4339 |
514-395-0337 ext. 4383 |
charlotte.verdebout@lautorite.qc.ca |
deborah.kouale-benime@lautorite.qc.ca |
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Geneviève Guay |
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Senior Coordinator, Mergers and Acquisitions |
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514-395-0337 ext. 4476 |
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genevieve.guay@lautorite.qc.ca |
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British Columbia Securities Commission |
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Gordon Smith |
Nazma Lee |
Manager, Corporate Finance, Legal Services |
Senior Legal Counsel, Corporate Finance, Legal Services |
604-899-6656 |
604-899-6867 |
gsmith@bcsc.bc.ca |
nlee@bcsc.bc.ca |
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Laura Lam |
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Senior Legal Counsel, Corporate Finance, |
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Legal Services |
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604-899-6792 |
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llam@bcsc.bc.ca |
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Alberta Securities Commission |
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Tracy Clark |
Melissa Yeh |
Senior Legal Counsel, Corporate Finance |
Legal Counsel, Corporate Finance |
403-355-4424 |
403-355-4181 |
Tracy.Clark@asc.ca |
Melissa.Yeh@asc.ca |
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Financial and Consumer Affairs Authority of Saskatchewan |
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Sonne Udemgba |
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Director, Legal, Securities Division |
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306-787-5879 |
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sonne.udemgba@gov.sk.ca |
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{1} Pursuant to the definition of "issuer bid" in section 1.1 of NI 62-104, an offer to acquire or redeem, or an acquisition or redemption, does not constitute an issuer bid if: (a) no valuable consideration is offered or paid by the issuer for the securities; (b) the offer to acquire or redeem, or the acquisition or redemption, is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders; or (c) the securities are debt securities that are not convertible into securities other than debt securities.
{2} The NCIB Exemption provides an exemption from the issuer bid requirements for NCIBs that are conducted: (i) through the facilities of a "designated exchange" (as that term is defined in NI 62-104), if that bid is made in accordance with the by-laws, rules, regulations, and policies of that exchange (the Designated Exchange Exemption); and/or (ii) on a published market, other than a designated exchange, subject to certain conditions (the Other Published Markets Exemption). Repurchases under the Other Published Markets Exemption are limited to 5% of the securities of a class whereas up to 10% of an issuer's "public float" (as defined in the rules, regulations, and policies of the designated exchange) may be repurchased under the Designated Exchange Exemption. These purchase limits may not be "piggy-backed" or "stacked" so that an issuer can repurchase 10% of its public float in reliance on the Designated Exchange Exemption and then purchase an additional 5% of its issued and outstanding securities in reliance on the Other Published Markets Exemption. If an issuer's public float is the same as the number of securities of the class that are issued and outstanding, then the issuer could repurchase up to 20% of the securities of the class in a given 12-month period in reliance on a combination of the Selective Repurchase Exemption, the employee, officer, director, and consultant exemption in section 4.7 of NI 62-104, and the NCIB Exemption.
{3} CSA Notice of Amendments to Early Warning System -- Amendments to MI 62-104 Take-Over Bids and Issuer Bids, NI 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, and Changes to NP 62-203 Take-Over Bids and Issuer Bids, (2016) 39 OSCB 1746.
{4} Re Bison Acquisition Corp, 2021 ABASC 188.
{5} SEC, Modernization of Beneficial Ownership Reporting, Release Nos. 33-11030; 34-94211 (February 10, 2022).
{6} SEC, Modernization of Beneficial Ownership Reporting, Release Nos. 33-11253; 34-98704 (October 10, 2023) at 109-110.
{7} Ibid at 110-112.
{8} Ibid at 113-115.
{9} Ibid at 236.
{10} A party that does not have a passive intent in respect of a reporting issuer (e.g., a party considering commencing a take-over bid, proposing a control transaction, and/or soliciting proxies in opposition to management) may be able to use derivatives to accumulate a substantial economic interest in an issuer without public disclosure and acquire the underlying securities in advance of a vote.
{11} A derivative counterparty could hedge and tender the underlying securities to a take-over bid despite not having an economic interest in the outcome of the bid, which could benefit a bidder.
{12} A derivative counterparty could hedge and vote on a matter subject to securityholder approval despite not having an economic interest in the outcome of matter.
{13} A derivative counterparty could hedge and not tender the underlying securities to a take-over bid, which could benefit a party that is opposed to the bid. A derivative counterparty could hedge and refrain from voting on a matter subject to securityholder approval, thereby amplifying the relative voting power of all other securityholders.
{14} For example, the United Kingdom, France, Hong Kong and Australia.
{15} NI 51-102, subsections 9.2(2) and 9.2(4).
{16} For example, a prospective offeror repeatedly accumulating and/or disposing of substantial economic positions via equity equivalent derivatives could result in the counterparty hedging its position by repeatedly acquiring and/or disposing of the reference securities, which could have a distortive impact on the market price, particularly if the securities are relatively illiquid. A prospective bidder could also time market purchases of equity securities in coordination with their derivative arrangements in a manner that impugns compliance with the provisions of NI 62-104 that regulate pre-bid acquisitions.
{17} Re NorthWest Copper Corp, 2023 BCSECCOM 602.
{18} In Kingsway Financial Services Inc v Kobex Capital Corp, 2016 BCSC 460, the British Columbia Supreme Court held that paragraph 4.5(c) of NI 62-103 requires an EII to report securityholding increases or decreases of 2.5% relative to their previous report, and that it does not set up fixed tiers of 12.5%, 15%, 17.5%, 20%, etc.
{19} Re Falconbridge Ltd (2006), 29 OSCB 6783 at para 73.
{20} See section 2.24 of National Instrument 45-106 Prospectus Exemptions (NI 45-106), which provides that the prospectus requirement does not apply to a distribution by an issuer with an employee, executive officer, director or consultant of the issuer.
{21} An exemption from the Proportionate Take Up Requirement already exists in subsection 2.26(3) of NI 62-104 for modified "Dutch auction" issuer bids, however, that exemption relates to the return of securities tendered at prices in excess of the Determined Purchase Price and would not apply to a Proportionate Tender.
{22} "Greenmail" refers to a situation where a securityholder threatens to take an action, such as commencing a take-over bid or seeking to replace the issuer's board of directors or management, unless the issuer agrees to repurchase its securities from the securityholder.
PROPOSED AMENDMENTS TO NATIONAL INSTRUMENT 62-104 TAKE-OVER BIDS AND ISSUER BIDS
1. National Instrument 62-104 Take-Over Bids and Issuer Bids is amended by this Instrument.
2. The title of the Instrument is replaced with the following:
National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System.
3. Section 1.1 is amended by adding the following definitions:
"derivative" has the same meaning as in National Instrument 55-104 Insider Reporting Requirements and Exemptions;;
"economic exposure" has the same meaning as in National Instrument 55-104 Insider Reporting Requirements and Exemptions;;
"economic interest" has the same meaning as in National Instrument 55-104 Insider Reporting Requirements and Exemptions;;
"equity equivalent derivative" means one or more derivatives, that are referenced to, or derived from, a voting or equity security of an issuer and which provide the holder, directly or indirectly, with an economic interest that is substantially equivalent to the economic interest associated with beneficial ownership of the security;;
"freely tradeable" has the same meaning as in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions;;
"related financial instrument" has the same meaning as in National Instrument 55-104 Insider Reporting Requirements and Exemptions;;
"related party" has the same meaning as in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions;.
4. The following section is added before Part 2:
Determination of the existence of a liquid market
1.12 (1) For the purposes of paragraph 4.6.1(1)(c), a liquid market in a class of securities of an issuer exists at the date of an issuer bid only if all of the following conditions are satisfied:
(a) there is a published market for the class of securities;
(b) during the period of 12 months before the date of the issuer bid,
(i) the number of outstanding securities of the class was at all times at least 5 000 000, excluding securities beneficially owned, or over which control or direction was exercised, by related parties of the issuer and securities that were not freely tradeable,
(ii) the aggregate trading volume of the class of securities on the published market on which the class was principally traded was at least 1 000 000 securities,
(iii) there were at least 1000 trades in securities of the class on the published market on which the class was principally traded, and
(iv) the aggregate value of the trades in securities of the class on the published market on which the class was principally traded was at least $15 000 000;
(c) the market value of the class of securities on the published market on which the class was principally traded was at least $75 000 000 for the calendar month preceding the calendar month in which the issuer bid is made, calculated by multiplying the number of securities of the class outstanding as of the close of business on the last business day of the calendar month, excluding securities beneficially owned, or over which control or direction was exercised, by related parties of the issuer and securities that were not freely tradeable, by
(i) the average of the closing prices of the securities of that class on the published market on which that class was principally traded for each of the trading days during the calendar month, if the published market provides a closing price for the securities, or
(ii) the average of the simple averages of the highest and lowest prices of the securities of that class on the published market on which that class was principally traded for each of the trading days for which the securities traded during the calendar month, if the published market does not provide a closing price, but provides only the highest and lowest prices of securities traded on a particular day.
(2) For the purposes of subsection (1), if there is more than one published market for a class of securities, the published market on which the class was principally traded must be determined as follows:
(a) if only one of the published markets is in Canada, the published market on which the class was principally traded is the published market in Canada;
(b) if there is more than one published market in Canada, the published market on which the class was principally traded is the published market in Canada on which the greatest volume of trading in that class occurred during the 20 business days preceding the date of the issuer bid;
(c) if there is no published market in Canada, the published market on which the class was principally traded is the published market on which the greatest volume of trading in that class occurred during the 20 business days preceding the date of the issuer bid..
5. Section 2.2 is amended by repealing subsections (3) and (4).
6. Section 2.3 is amended in subsection (2) by adding ", or securities that are convertible into securities of that class," after "securities of the class subject to the bid".
7. The following section is added before Division 2:
Disclosure of changes in economic exposure during take-over bid
2.7.1 (1) If, before the expiry of a take-over bid, an offeror acquires or disposes of an interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the offeree issuer, including, for greater certainty, an equity equivalent derivative, or there is a change in an offeror's interest in, or right or obligation associated with, the related financial instrument, the offeror must, before the opening of trading on the business day following the date of the acquisition, disposition or change, issue and file a news release disclosing the following:
(a) the material terms of the related financial instrument and its impact on the offeror's securityholdings in, and economic exposure to, the offeree issuer;
(b) whether the offeror has the ability, formally or informally, to obtain the voting or equity securities or to direct the voting of voting securities held by a counterparty to the related financial instrument;
(c) a description of any past or present relationship between the offeror and a counterparty to the related financial instrument, or an affiliate of the counterparty, including, for greater certainty, the name of the counterparty and, if applicable, the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect.
(2) If, before the expiry of a take-over bid, an offeror enters into, terminates or amends an agreement, arrangement or understanding that has the effect of altering the offeror's economic exposure to the offeree issuer and disclosure is not otherwise required under subsection (1), the offeror must, before the opening of trading on the business day following the date of the entering into, termination or amendment, issue and file a news release disclosing the following:
(a) the material terms of the agreement, arrangement or understanding and its impact on the offeror's economic exposure to the offeree issuer;
(b) a description of any past or present relationship between the offeror and a counterparty to the agreement, arrangement or understanding, or an affiliate of the counterparty, including, for greater certainty, the name of the counterparty and, if applicable, the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect..
8. Section 2.12 is amended in subsection (1) by adding "including, for greater certainty, the mandatory 10-day extension period," before "and whether or not".
9. Section 2.26 is amended by adding the following subsection:
(3.1) Subsection (1) does not apply to securities deposited under the terms of an issuer bid by a security holder that
(a) is entitled to elect to sell the number of securities required to be sold so that the proportion of securities of the class owned by the security holder after completion of the bid equals the proportion of securities of that class owned by the security holder before the bid, and
(b) makes the election..
10. Paragraph 2.30(1)(c) is amended by replacing "within 3 business days" with "promptly".
11. Section 2.31.1 is amended
(a) by deleting "and" at the end of paragraph (a),
(b) in clause (b)(iv)(A) by replacing "pay for securities taken up as soon as possible, and in any event not later than 3 business days after the securities are taken up" with "pay promptly for securities taken up",
(c) in clause (b)(iv)(B) by replacing "pay for securities taken up as soon as possible and in any event not later than 3 business days after the securities are taken up." with "pay promptly for securities taken up, and", and
(d) by adding the following paragraph:
(c) send a notice of variation to each holder of securities to whom the bid was required to be sent under section 2.8..
12. Section 2.32 is amended
(a) in subsection (2) by replacing "An offeror must pay" with "An offeror must pay promptly" and deleting "as soon as possible, and in any event not later than 3 business days after securities deposited under the bid are taken up", and
(b) by adding the following subsection:
(4.1) Despite subsection (4), an offeror may extend an issuer bid for which all the terms and conditions have been complied with or waived without first taking up all securities deposited under the bid and not withdrawn if all of the following apply:
(a) the terms of the bid entitle security holders to elect a minimum price per security, within a range of prices, at which they are willing to sell their securities under the bid;
(b) at the time of the extension, the aggregate price payable for the securities deposited under the bid and not withdrawn is less than the maximum aggregate price payable under the bid;
(c) at the time of the extension, the market price of the securities is not greater than the maximum price per security within a range of prices set out in the terms of the bid..
13. Subsection 2.32.1(2) is amended by replacing "An offeror must pay" with "An offeror must pay promptly" and deleting "as soon as possible, and in any event not later than 3 business days after securities deposited under the bid are taken up".
14. Section 4.3 is amended by replacing paragraph (c) with the following:
(c) the number of security holders of that class of securities at the date of the bid is not more than 50, excluding any holder that is, at the date of the bid
(i) an employee, officer, director or consultant of the offeree issuer or an affiliate of the offeree issuer,
(ii) a former employee, officer, director or consultant of the offeree issuer that, while in that relationship, was, and has continued after the end of that relationship to be, a security holder of the offeree issuer,
(iii) a former employee, officer, director or consultant of an affiliate of the offeree issuer that, while in that relationship, was, and has continued after the end of that relationship to be, a security holder of the offeree issuer, or
(iv) a spouse of a person referred to in subparagraph (i), (ii) or (iii) where the person has control or direction over the securities of the offeree issuer beneficially owned by the spouse..
15. The following section is added after section 4.6:
Selective repurchase exemption
4.6.1 (1) An issuer bid for a class of securities is exempt from Part 2 if all of the following conditions are satisfied:
(a) the aggregate number of securities or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer in reliance on this exemption during the 12 months immediately preceding the date of the bid does not exceed 5% of the securities of that class outstanding at the beginning of the 12-month period;
(b) the securities acquired by the issuer in reliance on this exemption during the 12 months immediately preceding the date of the bid are acquired from not more than 5 persons in the aggregate and in not more than 5 transactions in the aggregate;
(c) a liquid market in the class of securities that is the subject of the bid exists at the date of the bid, determined in accordance with section 1.12;
(d) the bid is made outside of the regular trading hours of the market on which the class of securities that is the subject of the bid is principally traded, determined in accordance with subsection 1.12(2);
(e) the value of the consideration paid by the issuer for any of the securities acquired in reliance on this exemption, including brokerage fees or commissions, is less than the closing price of the class of securities that is the subject of the bid on the market on which the class is principally traded, determined in accordance with subsection 1.12(2), at the date of the bid;
(f) the board of directors of the issuer has determined that
(i) following the completion of the bid, the market for the class of securities that is the subject of the bid would not reasonably be expected to be materially less liquid than the market that existed at the date of the bid, and
(ii) the bid would not reasonably be expected to have a significant negative effect on the market price or value of the class of securities that is the subject of the bid;
(g) neither the issuer nor, to the knowledge of the issuer after reasonable inquiry, the selling security holder has knowledge of any material fact or material change in respect of the issuer or its securities that has not been generally disclosed at the date of the bid;
(h) the issuer issues and files, after making the bid and before the opening of trading of the market on which the class of securities that is the subject of the bid is principally traded, determined in accordance with subsection 1.12(2), a news release disclosing the following information:
(i) the name of the selling security holder;
(ii) the number of securities or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer;
(iii) the value of the consideration paid by the issuer for the securities per security and in total;
(iv) the market price of the class of securities at the date of the bid;
(v) the aggregate number of securities or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer within the preceding 12-month period in reliance on this exemption.
(2) In subsection (1), if an issuer makes an offer to acquire securities from a person and the issuer knows or ought to know after reasonable enquiry that
(a) the person acquired the securities in order that the issuer might make use of the exemption under subsection (1), then each person from whom those securities were acquired must be counted as one person in the determination of the number of persons to whom an offer to acquire has been made, or
(b) the person from whom the acquisition is being made is acting as a nominee, agent, trustee, executor, administrator or other legal representative for one or more other persons having a direct beneficial interest in those securities, then each of those other persons must be counted as one person in the determination of the number of persons to whom an offer to acquire has been made.
(3) Despite paragraph (2)(b), a trust or estate is to be considered a single security holder in the determination of the number of persons to whom an offer to acquire has been made if
(a) an inter vivos trust has been established by a single settlor, or
(b) an estate has not vested in all persons who are beneficially entitled to it..
16. Section 4.7 is amended by replacing "executive officer" with "officer".
17. Section 4.8 is amended by replacing subsection (1) with the following:
(1) In this section, "designated exchange" means the Toronto Stock Exchange, the TSX Venture Exchange, Cboe Canada Inc., CNSX Markets Inc. or other exchange recognized or designated by the securities regulatory authorities for the purpose of this Instrument..
18. Section 4.9 is amended by replacing paragraph (c) with the following:
(c) the number of security holders of that class of securities at the date of the bid is not more than 50, excluding any holder that is, at the date of the bid
(i) an employee, officer, director or consultant of the issuer or an affiliate of the issuer,
(ii) a former employee, officer, director or consultant of the issuer that, while in that relationship, was, and has continued after the end of that relationship to be, a security holder of the issuer,
(iii) a former employee, officer, director or consultant of an affiliate of the issuer that, while in that relationship, was, and has continued after the end of that relationship to be, a security holder of the issuer, or
(iv) a spouse of a person referred to in subparagraph (i), (ii) or (iii) where the person has control or direction over the securities of the issuer beneficially owned by the spouse..
19. Section 5.1 is amended
(a) in subsection (1) by adding the following definitions:
"securityholding percentage" means a person's beneficial ownership of, or control or direction over, a class of voting or equity securities of a reporting issuer, or securities convertible into the class of voting or equity securities, expressed as a percentage of the outstanding securities of the class, calculated in accordance with applicable securities legislation listed in Appendix D of NI 62-103The Early Warning System and Related Take-Over Bid and Insider Reporting Issues;
"solicit" has the same meaning as in National Instrument 51-102 Continuous Disclosure Obligations., and
(b) by adding the following subsections:
(3) For the purposes of this Part, securities beneficially owned, or over which control or direction is exercised, by a person at the time that an issuer becomes a reporting issuer are deemed to have been acquired by the person at that time.
(4) For the purposes of this Part, a person acting jointly or in concert with one or more other persons in respect of an issuer is deemed to have acquired the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by the other person or persons when the first mentioned person began acting jointly or in concert with that other person or those other persons.
(5) For the purposes of this Part, a person that ceases acting jointly or in concert with one or more other persons in respect of an issuer is deemed to have disposed of the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by the other person or persons at the time the first mentioned person ceases acting jointly or in concert with that other person or those other persons.
(6) For the purposes of determining control or direction over securities of an issuer under sections 5.2 and 5.4, an acquiror or person acting jointly or in concert with the acquiror has acquired, and has, control or direction over a security, including an unissued security, if the acquiror or person is a counterparty to an equity equivalent derivative of the security during the period that
(a) begins on the date that the acquiror or person commences a solicitation under paragraph 9.1(2)(b) of National Instrument 51-102 Continuous Disclosure Obligations, and
(b) ends on the later of the following:
(i) the date on which the meeting in respect of the solicitation is held;
(ii) the date on which the acquiror or person issues and files a news release stating that the solicitation has ceased..
20. Section 5.2 is amended
(a) by replacing subsection (2) with the following:
(2) An acquiror that is required to file a report under paragraph (1)(b) must issue and file a news release and file another report, in accordance with paragraphs (1)(a) and (b), each time any of the following apply:
(a) the acquiror, or any person acting jointly or in concert with the acquiror, acquires or disposes of beneficial ownership of, or acquires or ceases to have control or direction over, either of the following:
(i) securities in an amount that results in an increase or a decrease in the securityholding percentage of the acquiror of 2% or more than the securityholding percentage reported in the most recent report required to be filed by the acquiror under subsection (1) or this subsection;
(ii) securities convertible into the class of securities that was the subject of the most recent report required to be filed by the acquiror under subsection (1) or this subsection that results in an increase or a decrease of 2% or more than the securityholding percentage reported by the acquiror in that report;
(b) there is a change in a material fact contained in the most recent report required to be filed under paragraph (1)(b) or paragraph (a) of this subsection.,
(b) by replacing subsection (3) with the following:
(3) An acquiror must issue and file a news release and file a report, in accordance with paragraphs (1)(a) and (b), if the acquiror's securityholding percentage, as reported in the most recent report required to be filed by the acquiror under this section, decreases to less than 10%.,and
(c) by adding the following subsection:
(5) Paragraph (1)(a) does not apply to an acquiror in respect of a deemed acquisition of securities under subsection 5.1(3)..
21. Section 5.3 is amended by adding the following subsection:
(3) Subsection (1) does not apply to an acquiror in respect of a deemed acquisition of securities under subsection 5.1(3)..
22. Section 5.4 is amended
(a) by replacing subsection (2) with the following:
(2) An acquiror must issue and file a news release containing the information required under subsection (3) before the opening of trading on the next business day each time the acquiror, or any person acting jointly or in concert with the acquiror, acquires beneficial ownership of, or control or direction over, in aggregate, securities of the class subject to the bid that results in a change in the securityholding percentage of the acquiror of 2% or more than the securityholding percentage reported in the most recent news release required to be filed by the acquiror under this section., and
(b) in paragraph (e) of subsection (3) by replacing "market in" with "market on".
23. Form 62-104F1 Take-Over Bid Circular is amended
(a) in Part 1 in paragraph (a) by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System", and
(b) by adding the following item:
Item 8.1. Interests affecting economic exposure
(1) If the offeror, or any person acting jointly or in concert with the offeror, has, or had at any time during the 6-month period preceding the date of the take-over bid, an interest in, or right or obligation associated with, a related financial instrument involving a voting or equity security of the offeree issuer, including, for greater certainty, an equity equivalent derivative, disclose the following:
(a) the material terms of the related financial instrument and its impact on the offeror's or person's securityholdings in, and economic exposure to, the offeree issuer;
(b) the date the interest in, or the right or obligation associated with, the related financial instrument was acquired;
(c) whether the offeror or person has or had the ability, formally or informally, to obtain the voting or equity securities or to direct the voting of voting securities held by a counterparty to the related financial instrument;
(d) a description of any past or present relationship between the offeror or person and a counterparty to the related financial instrument, or an affiliate of the counterparty, including, for greater certainty, the name of the counterparty and, if applicable, the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect.
(2) If the offeror, or any person acting jointly or in concert with the offeror, is a party, or has been a party at any time during the 6-month period preceding the date of the take-over bid, to any agreement, arrangement or understanding that has or had the effect of altering, directly or indirectly, the economic exposure of the offeror or person to the offeree issuer and disclosure is not otherwise required under subsection (1), disclose the following:
(a) the material terms of the agreement, arrangement or understanding and its impact on the offeror's or person's economic exposure to the offeree issuer;
(b) the date of the agreement, arrangement or understanding;
(c) a description of any past or present relationship between the offeror or person and a counterparty to the agreement, arrangement or understanding, or an affiliate of the counterparty, including, for greater certainty, the name of the counterparty and, if applicable, the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect..
24. Form 62-104F2 Issuer Bid Circular is amended
(a) in Part 1 in paragraph (a) by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System",
(b) in Item 2 of Part 2 by replacing "dutch auctions" with "Dutch auctions", and
(c) in Item 8 of Part 2 by replacing the last paragraph with the following:
If an issuer intends to rely on one or more of the exceptions from the proportionate take up and payment requirements found in subsections 2.26(2), (3) and (3.1) of the Instrument relating to standard trading units, "Dutch auctions" and proportionate tenders, describe the mechanism under which securities would be deposited and taken up without proration..
25. Form 62-104F3 Directors' Circular is amended in Part 1 in paragraph (a) by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
26. Form 62-104F4 Director's or Officer's Circular is amended in Part 1 in paragraph (a) by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
27. Form 62-104F5 Notice of Change or Notice of Variation is amended in Part 1 in paragraph (a) by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
28. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues is amended by this Instrument.
2. Section 1.1 is amended in subsection (1)
(a) by replacing the definition of "equity security" with the following:
"equity security" has the meaning ascribed to that term in section 1.1 of NI 62-104;,
(b) by repealing the definition of "news release",
(c) in the definition of "NI 62-104" by replacing "Take-Over Bids and Issuer Bids" with "Take-Over Bids, Issuer Bids and the Early Warning System", and
(d) by replacing the definition of "significant change in a related financial instrument position" with the following:
"significant change in a related financial instrument position" means, in relation to an entity and a related financial instrument that involves, directly or indirectly, a security of a reporting issuer, any change in the entity's interest in, or right or obligation associated with, the related financial instrument if the change has a similar economic effect to an increase or decrease in the entity's securityholding percentage in a class of voting or equity securities of the reporting issuer in respect of which the entity would be required to file a report under the early warning requirements or, if the entity is relying on the exemption in section 4.1, Part 4;.
3. Section 4.3 is amended by adding the following subsection:
(5) If an eligible institutional investor that is not relying on the exemption in section 4.1, including, for greater certainty, an eligible institutional investor that was but is no longer disqualified under section 4.2 from filing reports under this Part, intends to file reports under this Part for the reporting issuer, the eligible institutional investor shall
(a) promptly issue and file a news release that includes a statement that the eligible institutional investor is eligible to file reports under this Part and that it intends to do so for the reporting issuer; and
(b) file a report in accordance with paragraph 4.5(a)..
4. Section 4.5 is amended by replacing paragraph (c) with the following:
(c) within 10 days after the end of the month in which the securityholding percentage of the eligible institutional investor in a class of voting or equity securities of the reporting issuer, as at the end of the month, increased or decreased past
(i) 12.5 percent of the outstanding securities of the class, or
(ii) each 2.5 percent threshold in excess of 12.5 percent of the outstanding securities of the class; and.
5. Form 62-103F1 Required Disclosure under the Early Warning Requirements is amended
(a) by replacing the Instruction under Item 2 with the following:
INSTRUCTIONS
(i) If the acquiror is a corporation, partnership, trust, fund, association, syndicate, organization or organized group of persons, provide its name, the address of its head office, its jurisdiction of incorporation or organization, and its principal business.
(ii) If the acquiror is neither an individual nor a reporting issuer, provide the name of each person or company that controls, within the meaning of section 1.4 of NI 62-104, the acquiror.,
(b) in section 3.6 of Item 3 by adding "in, and economic exposure to, the issuer" after "impact on the acquiror's securityholdings", and
(c) in section 3.8 of Item 3 by adding "and its impact on the acquiror's economic exposure to the issuer" after "material terms of the agreement, arrangement or understanding".
6. Form 62-103F2 Required Disclosure by an Eligible Institutional Investor under Section 4.3 is amended in Item 3
(a) in section 3.5 by adding "in, and economic exposure to, the issuer" after "impact on the eligible institutional investor's securityholdings", and
(b) in section 3.7 by adding "and its impact on the eligible institutional investor's economic exposure to the issuer" after "material terms of the agreement, arrangement or understanding".
7. Form 62-103F3 Required Disclosure by an Eligible Institutional Investor under Part 4 is amended in Item 3
(a) in section 3.5 by adding "in, and economic exposure to, the issuer" after "impact on the eligible institutional investor's securityholdings", and
(b) in section 3.7 by adding "and its impact on the eligible institutional investor's economic exposure to the issuer" after "material terms of the agreement, arrangement or understanding".
8. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. National Instrument 51-102 Continuous Disclosure Obligations is amended by this Instrument.
2. Section 1.1 is amended in subsection (1) by adding the following definitions:
"economic exposure" has the same meaning as in National Instrument 55-104 Insider Reporting Requirements and Exemptions;;
"equity equivalent derivative" has the same meaning as in National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System;;
"related financial instrument" has the same meaning as in National Instrument 55-104 Insider Reporting Requirements and Exemptions;.
3. Section 9.2 is amended in paragraph (4)(c) by replacing subparagraph (ii) with the following:
(ii) the information required under item 2, sections 3.2, 3.3 and 3.4 of item 3, paragraphs (b) and (d) of item 5 and section 6.6 of item 6 of Form 51-102F5 Information Circular,.
4. Form 51-102F2 Annual Information Form is amended in section 18.1 of Item 18
(a) under "Form 51-102F5 Reference" by replacing "Item 6 -- Voting Securities and Principal Holders of Voting Securities" with "Item 6 -- Voting Securities and Interests Affecting Economic Exposure", and
(b) under "Modification"opposite "Item 6 -- Voting Securities and Interests Affecting Economic Exposure" by replacing "Do not include the disclosure specified in sections 6.2, 6.3 and 6.4." with "Do not include the disclosure specified in sections 6.2, 6.3, 6.4, 6.6, 6.7 and 6.8.".
5. Form 51-102F5 Information Circular is amended
(a) in Item 6 in the heading by replacing "Principal Holders of Voting Securities" with "Interests Affecting Economic Exposure",
(b) by adding the following items:
6.6 If the solicitation is made other than by or on behalf of management of the company, state the number and the percentage of each class of voting securities of the company beneficially owned, or controlled or directed, directly or indirectly, by, and the name of, each
(a) person or company by which, or on whose behalf, the solicitation is made, and
(b) affiliate of each person or company referred to in paragraph (a).
6.7 If the solicitation is made other than by or on behalf of management of the company, disclose, for each person or company referred to in section 6.6 that has an interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the company, including, for greater certainty, an equity equivalent derivative, the following:
(a) the material terms of the related financial instrument and its impact on the person or company's securityholdings in, and economic exposure to, the company;
(b) the date the interest in, or the right or obligation associated with, the related financial instrument was acquired;
(c) whether the person or company has the ability, formally or informally, to obtain the voting or equity securities or to direct the voting of voting securities held by a counterparty to the related financial instrument;
(d) a description of any past or present relationship between the person or company and a counterparty to the related financial instrument, or an affiliate of the counterparty, including, for greater certainty, the name of the counterparty and, if applicable, the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the company, or, if there is no such relationship, a statement to that effect.
6.8 If the solicitation is made other than by or on behalf of management of the company, disclose, for each person or company referred to in section 6.6 that is a party to an agreement, arrangement or understanding that has the effect of altering, directly or indirectly, the economic exposure of that person or company to the company and for which disclosure is not otherwise required under section 6.7, the following:
(a) the material terms of the agreement, arrangement or understanding and its impact on the person or company's economic exposure to the company;
(b) the date of the agreement, arrangement or understanding;
(c) a description of any past or present relationship between the person or company and a counterparty to the agreement, arrangement or understanding, or an affiliate of the counterparty, including, for greater certainty, the name of the counterparty and, if applicable, the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the company, or, if there is no such relationship, a statement to that effect., and
(c) in Item 7 in paragraph 7.1(e) by replacing "if a director" with "If a director".
6. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. National Policy 62-203 Take-Over Bids and Issuer Bids is changed by this Document.
2. The title of the Policy is replaced by the following:
National Policy 62-203 Take-Over Bids, Issuer Bids and the Early Warning System.
3. Part 1 is changed by replacing section 1.1 with the following:
1.1 Introduction -- National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System (the Instrument) governs take-over bids, issuer bids and the early warning system in all jurisdictions of Canada. This Policy and the Instrument, insofar as they relate to take-over bids and issuer bids, are together referred to as the "Bid Regime". This Policy, the Instrument and National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (NI 62-103), insofar as they relate to the early warning system, are together referred to as the "Early Warning System". This Policy outlines how the provincial and territorial securities regulatory authorities interpret or apply certain provisions of the Bid Regime and the Early Warning System, and provides corresponding guidance..
4. Part 2 is changed by
(a) replacing the title with "The Bid Regime", and
(b) adding the following sections:
2.4.1 Bid conditions -- While the Instrument does not expressly regulate conditions to take-over bids, except with respect to financing arrangements, there may be circumstances where bid conditions raise public interest concerns. That may be the case if a take-over bid includes conditions that require an offeree issuer to take actions for the benefit of the offeror where a refusal to do so would entitle the offeror not to consummate its bid, or where a bid contains conditions that grant an offeror unqualified judgment or discretion to determine whether the conditions have been satisfied, thereby providing the offeror with a degree of optionality that calls into question the credibility of the bid.,
2.18 Mini-tender offers -- A "mini-tender offer" refers to a widely disseminated offer to acquire outstanding voting or equity securities of an issuer where the securities subject to the offer to acquire, together with the offeror's securities, constitute in the aggregate less than 20% of the outstanding securities of the class. A mini-tender offer is not a take-over bid to which the requirements of Part 2 of the Instrument apply. However, both take-over bids and mini-tender offers require security holders to make tendering decisions. Accordingly, certain principles underlying the Bid Regime should be applied in the context of a mini-tender offer. In particular, security holders to whom a mini-tender offer is made should be treated equally, offered identical consideration, given a reasonable period of time to consider the terms of the offer and provided with adequate information that allows them to make a reasoned decision as to whether to accept or reject the offer.
Whether a security holder has been provided with sufficient time and information will depend on the circumstances of the mini-tender offer. As a guideline, with respect to take-over bids, the Instrument contemplates a minimum deposit period of 35 days, and Form 62-104F1 Take-Over Bid Circular sets out the information that securities regulatory authorities have determined is relevant to a security holder's tendering decision.
Securities regulatory authorities may intervene if a mini-tender offer is conducted in a manner or in circumstances that are prejudicial to the public interest. That could arise if, for example, specific elements of the Bid Regime that are derived from the underlying principles noted above are absent, including where a mini-tender offeror varies or extends its offer either without notice to security holders or in a manner in which notice is not likely to reach them, or where a mini-tender offeror does not provide sufficient time following a variation or extension for security holders to change their minds with respect to the offer. Securities regulatory authorities may also intervene if a mini-tender offer is made at such a substantial discount to the prevailing market price of the class of securities that no reasonable security holder would tender to it except through mistake, inadvertence or misunderstanding.
Security holders to whom a mini-tender offer is made who are not in a Canadian jurisdiction may have recourse under the laws of their home jurisdictions.,
2.19 Prompt payment for securities taken up -- The Bid Regime requires that offerors pay "promptly" for any securities taken up under the bid. Although not specifically defined, what we consider to be prompt in the context of the timing of payment for securities tendered under a bid and taken up is informed by the practices of the financial community, including settlement practices, then in effect. Accordingly, where the settlement period for securities trades is one business day after the trade date, we view payment within one business day from take up as being made "promptly".,
2.20 Date of the bid -- Certain exemptions from the take-over bid and issuer bid requirements refer to the market price of the securities at the "date of the bid". The date of the bid is the date on which an "offer to acquire" is made. If a person has a right to purchase securities owned by a second person (i.e., a call option), the date of the first person's bid generally would be the date on which the first person exercises the call option rather than the date on which the second person grants the call option, as it is upon exercise that the first person's investment decision crystallizes and an offer to acquire is made. Conversely, if a person has a right to sell securities that it owns to a second person (i.e., a put option), the date of the second person's bid generally would be the date on which the second person grants the put option rather than the date on which the first person exercises the put option, as it is upon grant that the second person's investment decision crystallizes and an offer to acquire is made., and
2.21 Selective offshore repurchases -- As issuer bids are defined as offers made by issuers to persons in the local jurisdiction, offers made to security holders who are not in Canada or residents of Canada technically fall beyond the definition of "issuer bid" for the purposes of Canadian securities legislation. However, Canadian securities regulatory authorities retain public interest jurisdiction over transactions by issuers in their local jurisdiction and may determine to intervene in any given transaction if the circumstances raise public interest concerns. In general, offshore repurchases would not raise public interest concerns if an issuer conducts repurchases from a security holder who is not in Canada or a resident of Canada in the circumstances and manner described in the selective repurchase exemption set out in section 4.6.1 of the Instrument.
Issuers considering a selective offshore repurchase who have questions regarding whether such a transaction would raise public interest concerns should contact the applicable securities regulatory authorities prior to proceeding with such transaction..
5. Part 3 is changed by
(a) replacing the title with "Take-Over Bid Requirements and the Early Warning System",
(b) replacing section 3.1 with the following:
3.1 Derivative arrangements -- The definition of "equity equivalent derivative" is intended to refer to a derivative or combination of derivatives which, either on their own or when taken together, are referenced to, or derived from, a voting or equity security of an issuer, with an economic interest that is substantially equivalent to the economic interest associated with beneficial ownership of the security. We would generally consider a derivative or combination of derivatives to substantially replicate the economic interest of owning a reference security if it provides a rate of return between 90% and 110% of the rate of return of the reference security. An equity equivalent derivative would include a cash settled equity total return swap or substantially similar derivative.
In general, the Instrument does not require an investor to aggregate securities that it beneficially owns with reference securities underlying equity equivalent derivatives held by it for the purposes of early warning reporting. However, an investor is deemed, for purposes of sections 5.2 and 5.4 of the Instrument only, to have acquired the reference securities underlying an equity equivalent derivative during the pendency of a solicitation made under paragraph 9.1(2)(b) of National Instrument 51-102 Continuous Disclosure Obligations. The purpose of this deeming provision is to require, by application of the early warning system, disclosure of changes in a soliciting securityholder's aggregate economic position, whether through beneficial ownership of securities or through economic interests in equity equivalent derivatives, subsequent to the filing of its proxy circular in circumstances where its aggregate economic position is equivalent to a beneficial ownership position of 10% or more of the outstanding securities of the class.
An investor that is a party to an equity swap or similar derivative arrangement may under certain circumstances have deemed beneficial ownership of, or control or direction over, the reference voting or equity securities. This could occur where the investor has the ability, formally or informally, to obtain the voting or equity securities or to direct the voting of voting securities held by any counterparties to the transaction. This determination would be relevant for compliance with the early warning and take-over bid requirements under the Instrument.
Equity equivalent derivatives must be disclosed in compliance with securities laws, having regard to circumstances where beneficial ownership of, or control or direction over, reference securities may be deemed. The disclosure or use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage securities regulatory authorities' public interest jurisdiction. For example, we may have public interest concerns where investors do not clearly and accurately differentiate between beneficial ownership of securities and economic interests in their public disclosures and instead express them as an aggregate economic interest, which can generate confusion in the market. We may also have public interest concerns where equity equivalent derivatives are used in a deliberate effort to accumulate substantial economic positions in an issuer if the holder seeks to influence the outcome of a potential take-over bid by either exerting pressure on a counterparty or communicating expectations of commercial incentives or disincentives for the counterparty or its affiliates dependent on how or when the counterparty acquires, disposes of or votes securities of the offeree issuer.
Paragraphs 2.7.1(1)(c) and 2.7.1(2)(b) of the Instrument and Item 8.1 of Form 62-104F1 Take-Over Bid Circular require a description of any past or present relationship between the offeror or any joint actor and a counterparty, or an affiliate of the counterparty, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect. Such relationships may include instances where the counterparty or an affiliate of the counterparty has a material financial interest in the offeror or any joint actor, has a material financial interest in future business involving the offeror or any joint actor, acts as a financial advisor to the offeror or any joint actor, or acts as a lead or co-lead lender or manager of a lending syndicate in connection with the bid. A relationship with a counterparty, or an affiliate of that counterparty, that terminated more than 24 months before a bid was commenced generally would not have to be disclosed on the basis that it could not be perceived to affect the counterparty's decision to acquire, dispose of or vote securities of the offeree issuer.,
(c) adding the following sections:
3.3 Change in plans or future intentions of the acquiror or a joint actor -- An acquiror that is required to make disclosure under subsection 5.2(1) of the Instrument must make further disclosure in accordance with subsection 5.2(1) each time there is a change in a material fact contained in the most recent report required to be filed under paragraph 5.2(1)(b) or subsection 5.2(2) of the Instrument. Subsection 5.2(1) of the Instrument refers to section 3.1 of NI 62-103, which in turn refers to the information required by Form 62-103F1 Required Disclosure under the Early Warning Requirements. Item 5 of Form 62-103F1 Required Disclosure under the Early Warning Requirements requires the acquiror to describe any plans or future intentions which it and any joint actor may have which relate to or would result in certain actions.
A change in plans or future intentions is a factual determination based on the circumstances of a particular transaction or a particular event. We expect that, when an acquiror or any joint actor takes significant steps with respect to a particular transaction or event, the acquiror will assess whether those actions, individually or taken together, constitute a change in the plans or future intentions disclosed in the acquiror's previous report filed under the early warning requirements.
We generally consider that a change in plans or future intentions will occur at the latest upon the execution of a definitive agreement to enter into a transaction, the commencement of a take-over bid, the public announcement of a proxy solicitation or a similar event, as applicable. However, a change in plans or future intentions may, in some instances, occur at an earlier stage of a particular transaction or a particular event. For example, if an acquiror or any joint actor has taken irrevocable steps to effect a potential transaction, or publicly announced information or facts that differ from the plans or future intentions that were previously disclosed, then those changes generally would trigger further disclosure under the early warning requirements. The foregoing is not intended to be exhaustive of all of the circumstances in which a change in plans or future intentions, as those terms are used in Item 5 of Form 62-103F1 Required Disclosure under the Early Warning Requirements, may occur.
An acquiror should re-assess the accuracy of the disclosure in its reports filed under the early warning requirements in respect of the plans or future intentions of the acquiror and any joint actor every time it is required to make further disclosure, including as a result of an increase or a decrease in its securityholding percentage that triggers a filing pursuant to paragraph 5.2(2)(a) of the Instrument.
If the acquiror's most recent report filed under the early warning requirements contains general language reserving the right to take any of the actions enumerated in Item 5 of Form 62-103F1 Required Disclosure under the Early Warning Requirements, we expect the acquiror to update the disclosure in such report as soon as a change in plans or future intentions with respect to a particular action actually occurs.
For greater clarity, this guidance also applies with respect to disclosure required under Form 62-103F2 Required Disclosure by an Eligible Institutional Investor under Section 4.3 and Form 62-103F3 Required Disclosure by an Eligible Institutional Investor under Part 4.
3.4 Reporting of acquisitions during bid -- Eligible institutional investors who are exempt from the early warning requirements under section 4.1 of NI 62-103 cannot continue to rely on the alternative monthly reporting system and must make disclosure in accordance with section 5.4 of the Instrument if, during the pendency of a non-exempt take-over bid or issuer bid, they acquire beneficial ownership of, or control or direction over, securities of the class subject to the bid that, when added to their securities of that class, constitute 5% or more of the outstanding securities of that class. The exemption in section 4.1 of NI 62-103 is in respect of the early warning requirements in section 5.2 of the Instrument and does not extend to the requirements in section 5.4 of the Instrument.
3.5 Applicability of the Early Warning System -- The Early Warning System and the concept of acting jointly or in concert apply to proxy solicitations generally, including for the purpose of voting on an alternative slate of directors, even in the absence of a take-over bid or issuer bid.
3.6 Calculation of early warning reporting thresholds -- Section 5.2 of the Instrument is a transactional requirement and requires that an acquiror conduct an analysis and calculation each time that the acquiror acquires one of the categories of securities referred to in that provision (i.e., a voting or equity security of a reporting issuer, or a security convertible into voting or equity securities of a reporting issuer). The securities that are the subject of the transaction at hand form the first part of the calculation.
Convertible securities that are not exercisable within 60 days are one of the categories of securities subject to section 5.2 of the Instrument, as they are "securities convertible into voting or equity securities of any class of a reporting issuer." Accordingly, where the subject transaction involves convertible securities, those convertible securities should be included in the first part of the calculation, irrespective of whether or not they are convertible within 60 days and irrespective of any conditions attached to them.
The securities that are the subject of the transaction at hand then need to be added to the second part of the calculation, being the "acquiror's securities" (determined in accordance with the provisions of the Instrument) to arrive at the numerator to be used for the securityholding percentage calculation.
The term "acquiror's securities" is defined as "securities of an issuer beneficially owned, or over which control or direction is exercised, on the date of the acquisition or disposition, by an acquiror or any person acting jointly or in concert with the acquiror." As the reference is to those securities "beneficially owned", whether convertible securities will be included as part of the "acquiror's securities" is to be determined with reference to section 1.8 of the Instrument.
The following are illustrative examples of the early warning reporting calculation:
An acquiror has 2,000 common shares and 1,000 options of IssuerCo. The acquiror acquires 500 warrants in IssuerCo in a trade. As of the trade date, none of the warrants are exercisable within 60 days and none of the options are exercisable within 60 days. The numerator, for the purposes of calculating the acquiror's securityholding percentage, would be 2,500 (consisting of the 500 warrants acquired that are not exercisable within 60 days and the 2,000 common shares comprising the "acquiror's securities"), and the denominator would be IssuerCo's number of common shares outstanding, unadjusted by any of the convertible securities held by the acquiror.
If the acquiror subsequently purchases an additional 200 warrants, the analytical exercise is repeated. As of this subsequent trade date, assume that none of the newly acquired warrants are exercisable within 60 days, that 250 of the 1,000 options held by the acquiror have vested (or will vest within 60 days) and that 300 of the 500 previously acquired warrants are now exercisable (or will be exercisable within 60 days). The numerator, for the purposes of the acquiror's securityholding percentage, would be 2,750 (consisting of the 200 newly acquired warrants that are not exercisable within 60 days and the "acquiror's securities", which would include the 2,000 common shares, the 250 vested options and the 300 currently exercisable warrants). The 250 vested options and 300 currently exercisable warrants forming part of the "acquiror's securities" would be added to IssuerCo's outstanding common shares to form the denominator of the securityholding percentage calculation.
Section 1.8 of the Instrument deems an acquiror to have acquired and to be the beneficial owner of a security, including an unissued security, if the acquiror is the beneficial owner of a security convertible into the security within 60 days following that date. Accordingly, the calculation of early warning reporting thresholds should be undertaken each time (a) a convertible security that is not exercisable within 60 days becomes exercisable within 60 days as a result of the passage of time, and (b) a convertible security that is exercisable within 60 days expires, lapses or terminates in accordance with its terms.
3.7 Calculating beneficial ownership on a fully diluted basis in limited circumstances -- The early warning reporting calculations are to be done on a partially diluted basis. However, in circumstances where the acquiror is acquiring convertible securities as part of a treasury offering and the terms of the convertible securities provide that either all of the convertible securities issued pursuant to such offering convert into the underlying voting or equity securities, or none of them do (for example, in a subscription receipt offering, or a fully backstopped rights offering), beneficial ownership may be calculated on a fully diluted basis as, in those circumstances, it would not be possible for only some (but not all) of the underlying securities in respect of that offering to be issued.
3.8 Trigger for subsequent alternative monthly reports -- An eligible institutional investor who satisfies the criteria set out in, and who is filing reports under, Part 4 of NI 62-103 for a reporting issuer (each, an AMR Filer) is required to file a report in accordance with Part 4 of NI 62-103 if the securityholding percentage of the AMR Filer in a class of voting or equity securities of the reporting issuer as of the end of the month in which the AMR Filer has acquired or disposed of beneficial ownership of, or acquired or ceased to have control or direction over, any securities of the class crosses one of the fixed 2.5% thresholds starting at 10% (e.g., 10%, 12.5%, 15%, 17.5%, etc.) when compared to the AMR Filer's most recently filed report. For example, if an AMR Filer has reported an 11.5% securityholding percentage in a class of voting or equity securities of a reporting issuer and the AMR Filer acquires an aggregate of 1.2% of the securities of that class over the course of a month such that, as of the end of the month, the AMR Filer's securityholding percentage in the class is 12.7%, the AMR Filer would be required to file a report in accordance with Part 4 of NI 62-103. This AMR Filer's next report would be required when its securityholding percentage in that class of securities decreases below 12.5% or increases above 15%.
3.9 Issuer actions -- Section 6.1 of NI 62-103 provides an entity with an exemption from the early warning requirements and the obligation to report under Part 4 of NI 62-103 until the entity undertakes a trade, at which time the entity must assess its post-trade securityholding percentage in the class of securities of the reporting issuer relative to the securityholding percentage in that class that the entity reported in its most recent early warning report or alternative monthly report, as applicable.
If the entity is not reporting under Part 4 of NI 62-103 and its securityholding percentage following the trade represents a 2% or greater change when compared to its most recently filed early warning report, then a subsequent early warning report and news release would be required. The following are illustrative examples of the issuer action exemption in the context of the early warning requirements:
A person has, and has reported, a 12% ownership position in a class of voting or equity securities of a reporting issuer. The reporting issuer conducts a repurchase of securities of the class, in which the person does not participate, that causes the person's securityholding percentage to increase to 14.5%. Pursuant to section 6.1 of NI 62-103, the person is not required to issue and file a news release or file a report at the time of the issuer action. Subsequent to the issuer action, the person acquires securities that amount to 1% of the class, increasing the person's securityholding percentage to 15.5%. As the person's securityholding percentage (i.e., 15.5%) represents a 2% or greater change in percentage ownership from the 12% that it most recently reported, the person is required to issue and file a news release and file a report in accordance with section 5.2 of the Instrument.
A person has, and has reported, a 12% ownership position in a class of voting or equity securities of a reporting issuer. The reporting issuer undertakes a private placement of securities of the class, in which the person does not participate, that causes the person's securityholding percentage to decrease to 11%. Pursuant to section 6.1 of NI 62-103, the person is not required to issue and file a news release or file a report at the time of the issuer action. Subsequent to the issuer action, the person acquires securities that amount to 2% of the class, increasing the person's securityholding percentage to 13%. As the person's securityholding percentage (i.e., 13%) represents only a 1% change in percentage ownership from the 12% that it most recently reported, the person is not required to issue and file a news release or file a report in accordance with section 5.2 of the Instrument.
If the entity is an AMR Filer and its securityholding percentage as at the end of the month in which it undertook a trade, when compared to its most recently filed alternative monthly report, increased or decreased past one of the fixed 2.5% thresholds starting at 10% (e.g., 10%, 12.5%, 15%, 17.5%, etc.), then an alternative monthly report would be required. The following are illustrative examples of the issuer action exemption in the context of the alternative monthly reporting system:
An AMR Filer has, and has reported, a 12% ownership position in a class of voting or equity securities of a reporting issuer. The reporting issuer conducts a repurchase of securities of the class, in which the AMR Filer does not participate, that causes the AMR Filer's securityholding percentage to increase to 14.5%. The AMR Filer does not undertake a trade in securities of that class in the month in which the issuer action occurred. Pursuant to section 6.1 of NI 62-103, the AMR Filer is not required to file a report in accordance with Part 4 of NI 62-103 in respect of the month in which the issuer action occurred. In the following month, the AMR Filer undertakes various trades in the class of securities, such that its securityholding percentage, as at the end of that month, is 15.5%. As the AMR Filer's securityholding percentage (i.e., 15.5%) has increased past the 12.5% and 15% reporting thresholds since the AMR Filer's most recently filed report, the AMR Filer is required to file a report in accordance with Part 4 of NI 62-103 in respect of that month.
An AMR Filer has, and has reported, a 12% ownership position in a class of voting or equity securities of a reporting issuer. The reporting issuer undertakes a private placement of securities of the class, in which the AMR Filer does not participate, that causes the AMR Filer's securityholding percentage to decrease to 9%. The AMR Filer does not undertake a trade in securities of that class in the month in which the issuer action occurred. Pursuant to section 6.1 of NI 62-103, the AMR Filer is not required to file a report in accordance with Part 4 of NI 62-103 in respect of the month in which the issuer action occurred. In the following month, the AMR Filer undertakes various trades in the class of securities, such that its securityholding percentage, as at the end of that month, is 11%. As the AMR Filer's securityholding percentage (i.e., 11%) has not increased or decreased past one of the fixed 2.5% thresholds since the AMR Filer's most recently filed report, the AMR Filer would not be required to file a report in accordance with Part 4 of NI 62-103 in respect of that month. The AMR Filer's next report would be required when its securityholding percentage in that class of securities decreases past 10% or increases past 12.5%..
Effective Date
6. These changes become effective on [x].
1. Companion Policy 51-102CP Continuous Disclosure Obligations is changed by this Document.
2. Part 9 is changed by adding the following section:
Derivative Arrangements
9.4 Section 3.1 of National Policy 62-203 Take-Over Bids, Issuer Bids and the Early Warning System provides guidance for the definition of "equity equivalent derivative". It also sets out when an investor must aggregate securities that it beneficially owns with reference securities underlying equity equivalent derivatives held by it for the purposes of early warning reporting.
The disclosure or use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage securities regulatory authorities' public interest jurisdiction. For example, we may have public interest concerns where investors do not clearly and accurately differentiate between beneficial ownership of securities and economic interests in their public disclosures and instead express them as an aggregate economic interest, which can generate confusion in the market. We may also have public interest concerns where equity equivalent derivatives are used in a deliberate effort to accumulate substantial economic positions in an issuer if the holder seeks to influence the outcome of a matter subject to securityholder approval by either exerting pressure on a counterparty or communicating expectations of commercial incentives or disincentives for the counterparty or its affiliates dependent on how or when the counterparty acquires, disposes of or votes securities of the issuer.
If a solicitation is made other than by or on behalf of management, items 6.7 and 6.8 of Form 51-102F5 Information Circular require a description of any past or present relationship between a person or company referred to in item 6.6 of Form 51-102F5 Information Circular and a counterparty, or an affiliate of the counterparty, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the company, or, if there is no such relationship, a statement to that effect. Such relationships may include instances where a counterparty or an affiliate of the counterparty has a material financial interest in the person or company, has a material financial interest in future business involving the person or company, acts as a financial advisor to the person or company, or acts as a lead or co-lead lender or manager of a lending syndicate in connection with the solicitation. A relationship with a counterparty, or an affiliate of that counterparty, that terminated more than 24 months before a solicitation was commenced generally would not have to be disclosed on the basis that it could not be perceived to affect the counterparty's decision to acquire, dispose of or vote securities of the company..
Effective Date
3. These changes become effective on [x].
1. Multilateral Instrument 13-102 System Fees is amended by this Instrument.
2. Appendix A is amended in Column B of Item 10 by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System" wherever the expression appears.
3. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. National Instrument 43-101 Standards of Disclosure for Mineral Projects is amended by this Instrument.
2. Section 1.1 is amended in the definition of "initial deposit period" by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. National Instrument 44-102 Shelf Distributions is amended by this Instrument.
2. Subsection 9B.1(3) is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets is amended by this Instrument.
2. Section 16 is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions is amended by this Instrument.
2. Section 1.1 is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System" wherever the expression appears.
3. Subsection 1.6(2) is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
4. Paragraph 2.2(1)(d) is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
5. Paragraph 4.2(3)(a) is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
6. Paragraph 5.3(3)(a) is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
7. Section 6.10 is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
8. (1) This Instrument comes into force on [x].
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after [x], these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. Companion Policy 55-104CP Insider Reporting Requirements and Exemptions is changed by this Document.
2. Subsection 3.2(3) is changed by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. These changes become effective on [x].
1. Companion Policy 61-101CP to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions is changed by this Document.
2. Section 4.1 is changed by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System" wherever the expression appears.
3. These changes become effective on [x].
The Ontario Securities Commission (the Commission or the OSC) is publishing this Annex to supplement the CSA Notice and Request for Comment Proposed Amendments and Changes to the Issuer Bid, Take-Over Bid and Beneficial Ownership Reporting Regimes (the CSA Notice) and to set out matters required to be addressed by the Securities Act (Ontario) (the Act). Unless otherwise defined in this Annex, defined terms or expressions used in this Annex have the same meanings provided in the CSA Notice. Please refer to the main body of the CSA Notice for additional details.
The CSA are publishing for comment the Proposed Amendments and the Proposed Changes to provide issuers with greater flexibility to repurchase their own securities, enhance transparency of ownership of derivative interests in specified circumstances, and reduce regulatory burden and enhance the integrity of the issuer bid, take-over bid, and early warning reporting regimes through clarifying amendments and supplemental policy guidance.{1}
The CSA undertook a review of the early warning system to consider the appropriateness of the current scope of:
• disclosure requirements concerning equity equivalent derivatives,
• the sufficiency of the current disclosure and timing requirements concerning acquirors' "plans or future intentions" in early warning filings, and
• other specific enhancements or housekeeping clarifications to the early warning system.
The CSA also undertook a review of the take-over bid and issuer bid regimes to consider certain targeted or housekeeping amendments, including the introduction of a new issuer bid exemption to allow selective repurchases, the use and disclosure of equity equivalent derivatives in the context of a take-over bid, and the removal of the 5% market purchase exemption for bidders during the pendency of a take-over bid.
The CSA reviewed the current and historical regulatory context in Canada, academic literature, the regulatory context in the United States and other foreign jurisdictions, and considered the experiences of CSA staff and feedback received during informal consultations with the securities advisory committees (or their equivalent) in Ontario, Quebec, and Alberta, which consist of legal practitioners and representatives of issuers and institutional investors, and from select derivatives dealers. Based on this research and feedback, the CSA determined that it would be appropriate to put forward targeted amendments and supplemental policy guidance in the form of the Proposed Amendments and the Proposed Changes.
As a result of the Proposed Amendments, the Commission is proposing to amend the references to NI 62-104 to reflect the proposed amendment to the title of NI 62-104 in each of the following rules that are only in effect in Ontario:
• Ontario Securities Commission Rule 48-501Trading During Distributions, Formal Bids and Share Exchange Transactions (OSC Rule 48-501);
• Ontario Securities Commission Rule 71-801Implementing the Multijurisdictional Disclosure System (OSC Rule 71-801); and
• Ontario Securities Commission Rule 71-802Implementing National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (OSC Rule 71-802).
The text of these proposed amendments is set out in Appendices 2 through 4 of this Annex M.
The Proposed Amendments and the Proposed Changes are intended to enhance the competitiveness of Canadian capital markets, to reduce regulatory burden for issuers without compromising investor protection, and to enhance the integrity of, and clarify, the early warning system and take-over bid and issuer bid regimes.
(i) Early Warning System
In respect of the early warning system, our Proposed Amendments include:
a. Equity Equivalent Derivatives
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Enhanced Disclosure of Equity Equivalent Derivatives in Specified Circumstances -- Background" and "- Policy Rationale for Proposed Amendments and Proposed Changes" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention, respectively.
ii. Proposed Intervention
We have proposed amendments to NI 62-104, Form 62-104F1, NI 51-102, and Form 51-102F5 to enhance the quality of disclosure in respect of equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer in the context of take-over bids and proxy solicitations made other than by or on behalf of management of an issuer for which an information circular is required to be sent.
In the case of bidders, we have proposed the following:
• Requiring prescribed disclosure in a take-over bid circular if an offeror, or any person acting jointly or in concert with the offeror (i) has, or had at any time during the 6-month period preceding the date of the take-over bid, an interest in, or right or obligation associated with, a related financial instrument involving a voting or equity security of the offeree issuer, including an equity equivalent derivative, or (ii) is a party, or has been a party at any time during the 6-month period preceding the date of the take-over bid, to any agreement, arrangement, or understanding that has or had the effect of altering, directly or indirectly, the economic exposure of the offeror or the person acting jointly or in concert with the offeror to the offeree issuer and disclosure is not otherwise required by (i) above.
• Requiring that an offeror issue and file a news release containing prescribed disclosure before the opening of trading on the business day following the relevant action if, during the pendency of a take-over bid, an offeror (i) acquires or disposes of an interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the offeree issuer, including an equity equivalent derivative, or there is a change in an offeror's interest in, or right or obligation associated with, the related financial instrument, or (ii) enters into, terminates, or amends an agreement, arrangement, or understanding that has the effect of altering the offeror's economic exposure to the offeree issuer and disclosure is not otherwise required by (i) above.
• Requiring that an offeror describe any past or present relationship between the offeror or any joint actor and a counterparty, or an affiliate of the counterparty, including the identity of the counterparty and the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of, or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect.
In the case of soliciting securityholders, we have proposed the following:
• Deeming an acquiror or a person acting jointly or in concert with the acquiror, for the purposes of sections 5.2 and 5.4 of NI 62-104 and only during the pendency of a proxy solicitation campaign, to have acquired, and to have, control or direction over a security, including an unissued security, if the acquiror is a counterparty to an equity equivalent derivative of the security.
• Requiring prescribed disclosure in an information circular of certain persons' or companies' (i) beneficial ownership of, or control or direction over, voting securities of the company, (ii) interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the company, including an equity equivalent derivative, and (iii) agreements, arrangements, or understandings that have the effect of altering, directly or indirectly, the persons' or companies' economic exposure to the company and disclosure is not otherwise required by (ii) above.
• Requiring prescribed disclosure in a solicitation in reliance on the public broadcast, speech, or publication exemption of certain persons' or companies' beneficial ownership of, or control or direction over, voting securities of the company.
• Requiring prescribed disclosure of any past or present relationship between a person or company referred to in Item 6.6 of Form 51-102F5 and a counterparty, or an affiliate of the counterparty, including the identity of the counterparty and the affiliate, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of, or vote securities of the company, or, if there is no such relationship, a statement to that effect.
iii. Alternatives Considered
We considered maintaining the status quo; however, in the context of take-over bids and proxy solicitations for which an information circular is required to be sent where securityholders are induced to make tendering or voting decisions, we think that information concerning the aggregate economic positions (i.e., a combination of beneficial ownership and economic interests in related financial instruments and other agreements, arrangements, or understandings that have the effect of altering economic exposure to the issuer) of a bidder or soliciting securityholder in the subject issuer is material to a securityholder's understanding in order to: (i) evaluate whether such interests are pertinent to the bidder or soliciting securityholder's influence and leverage in the determination of the matter; (ii) understand that any securities underlying equity equivalent derivatives held by the bidder or soliciting securityholder are subject to counterparty tendering and voting practices; and (iii) assess the viability of success of the bid or solicitation and potential alternative options. The proposed new disclosure requirements related to equity equivalent derivatives would apply only when there is a formal, public overture for control, which we think represents a relatively minimal intrusion into take-over bids and shareholder activism, and one which maintains an appropriate balance between issuers of securities and investors who seek to exert influence or control over issuers.
We also considered whether to alter the early warning system to require that equity equivalent derivatives be aggregated with an investor's beneficial ownership of securities for purposes of calculating the disclosure thresholds in all circumstances. We ultimately determined not to propose this as, in general, concerns that could arise in connection with activities such as hidden ownership, empty tendering, empty voting, and parking in the context of a take-over bid or matter subject to securityholder approval are substantially mitigated through compliance with the existing early warning system and related guidance concerning deemed beneficial ownership of, or control or direction over, referenced voting or equity securities. We also do not have evidence that derivatives are being used inappropriately or abusively with any regularity in our capital markets. Accordingly, although other jurisdictions around the world require aggregation of beneficial ownership and economic interests, we think that approach could have an undue impact on shareholder activism and impose a disproportionate burden relative to potential concerns, particularly in the absence of clear evidence to suggest that derivatives are being used in a manner contrary to the purposes of Canadian securities laws.
b. Early Warning Reporting Triggers and Disclosure
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Early Warning Reporting Triggers and Thresholds" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
Based on the experiences of CSA staff and feedback from various stakeholders, we have proposed amendments to:
• specify that an EWR is required to be filed by a person who had beneficial ownership of, or control or direction over, 10% or more of the outstanding voting or equity securities of a class prior to, and immediately following, an issuer becoming a reporting issuer;
• address a gap in NI 62-104 such that an acquisition or disposition of beneficial ownership of, or control or direction over, securities of a class following the formation or cessation of a joint actor relationship is no longer required for a reporting obligation to arise under the early warning system;
• clarify that the requirement to file a subsequent EWR is to be assessed on the basis of a 2% or more change in the acquiror's post-event percentage ownership of the outstanding securities of the particular class relative to the percentage ownership that the acquiror reported in its most recent EWR, and that EIIs are required to file an AMR upon crossing fixed 2.5% thresholds in excess of 10% (e.g., 12.5%, 15%, 17.5%, etc.); and
• permit an EII that is not filing reports under the AMR system to enter or re-enter the AMR system.
iii. Alternatives Considered
We considered maintaining the status quo, but determined to propose amendments to provide clarity to the market and enhance the integrity of the early warning system, including with respect to consistency and investor protection.
(ii) Take-Over Bid Regime
In respect of the take-over bid regime, our Proposed Amendments include:
a. Removing the 5% Market Purchase Exemption
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Amending Exemptions and Codifying Common Discretionary Exemptions -- Removing the 5% Market Purchase Exemption" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
As we do not believe that there is a compelling policy basis to retain the 5% Market Purchase Exemption, we have proposed to remove it.
iii. Alternatives Considered
We considered maintaining the status quo and retaining the 5% Market Purchase Exemption. However, for the reasons referred to above, we have proposed to remove it.
b. Expanding the Non-Reporting Issuer Exemption
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Amending Exemptions and Codifying Common Discretionary Exemptions -- The Non-Reporting Issuer Exemptions from the Take-Over Bid and Issuer Bid Requirements" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
We have proposed to expand the NRI TOB Exemption by codifying the exemptive relief from the take-over bid requirements granted to expand the categories of persons permitted to be excluded for the purposes of calculating the Maximum Securityholder Condition to include Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons where the Qualifying Person or Employee Adjacent Person has control or direction over the subject issuer's securities that are beneficially owned by the spouse.
iii. Alternatives Considered
We considered maintaining the status quo and continuing to require that bidders apply on an individual basis for exemptive relief in order to be able to exclude Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons for the purposes of calculating the Maximum Securityholder Condition. However, to reduce regulatory burden, we have proposed to expand the NRI TOB Exemption and codify the exemptive relief that has been granted by adding these additional categories of persons directly to the NRI TOB Exemption.
(iii) Issuer Bid Regime
In respect of the issuer bid regime, our Proposed Amendments and Changes include:
a. Selective Repurchase Exemption
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- New Selective Repurchase Exemption -- Background" and "- Policy Rationale for the Selective Repurchase Exemption" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention, respectively.
ii. Proposed Intervention
In response to comments received from various stakeholders, and given that the equal treatment concerns underlying the issuer bid regime are less acute where there is a liquid market in the class of securities, we have proposed the Selective Repurchase Exemption, a new exemption that would allow issuers to repurchase up to 5% of the outstanding securities of a class in a 12-month period, provided that certain conditions are satisfied. The Selective Repurchase Exemption codifies a discretionary exemption for which issuers previously had to apply.
iii. Alternatives Considered
We considered maintaining the status quo and continuing to require that issuers wishing to conduct a selective repurchase apply on an individual basis for exemptive relief. However, for the reasons referred to elsewhere in this Annex, we determined to propose the Selective Repurchase Exemption.
b. Expanding the Non-Reporting Issuer Exemption
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Amending Exemptions and Codifying Common Discretionary Exemptions -- The Non-Reporting Issuer Exemptions from the Take-Over Bid and Issuer Bid Requirements" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
Similar to the NRI TOB Exemption, we have proposed to expand the NRI Issuer Bid Exemption by codifying the exemptive relief from the issuer bid requirements granted to expand the categories of persons permitted to be excluded for the purposes of calculating the Maximum Securityholder Condition to include Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons where the Qualifying Person or Employee Adjacent Person has control or direction over the subject issuer's securities that are beneficially owned by the spouse.
iii. Alternatives Considered
We considered maintaining the status quo and continuing to require that issuers apply on an individual basis for exemptive relief in order to be able to exclude Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons for the purposes of calculating the Maximum Securityholder Condition. However, to reduce regulatory burden, we have proposed to expand the NRI Issuer Bid Exemption and codify the exemptive relief that has been granted by adding these additional categories of persons directly to the NRI Issuer Bid Exemption.
c. Accommodating the Mechanics of Modified Dutch Auction Issuer Bids
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Amending Exemptions and Codifying Common Discretionary Exemptions -- Modified Dutch Auction Issuer Bids -- Extension Take Up Requirement" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
We have proposed to add subsection 2.32(4.1) to NI 62-104 to codify the relief from the Extension Take Up Requirement that has been granted to accommodate the mechanics of modified "Dutch auction" issuer bids. This exemption will result in securityholders who tendered to the bid during the initial deposit period having to wait until the expiry of the extension period for their securities to be taken up and paid for. There are circumstances where we do not believe that it is appropriate for securityholders to be prejudiced by this delay in take up and payment, such as when the bid is not undersubscribed, or when the market price of the securities is greater than the highest price per security offered by the issuer. We have specifically addressed these issues in the Proposed Amendments.
iii. Alternatives Considered
We considered maintaining the status quo and continuing to require that issuers conducting modified "Dutch auction" issuer bids apply on an individual basis for exemptive relief. However, to reduce regulatory burden, we have proposed amendments to codify the exemptive relief that has been granted.
d. Expanding the Exemption from the Proportionate Take Up Requirement
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Amending Exemptions and Codifying Common Discretionary Exemptions -- Issuer Bids -- Proportionate Tenders" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
While no issuer has applied for relief from the Proportionate Take Up Requirement in circumstances other than where the issuer was conducting an issuer bid pursuant to a modified "Dutch auction" process, we do not see a basis to limit the ability to elect to make a Proportionate Tender to modified "Dutch auction" issuer bids. Accordingly, we have proposed amendments to codify the exemptive relief that has been granted to facilitate Proportionate Tenders in respect of issuer bids generally.
iii. Alternatives Considered
We considered maintaining the status quo and continuing to require that issuers apply on an individual basis for exemptive relief if they wish to provide a Proportionate Tender option as part of its issuer bid. However, to reduce regulatory burden, we have proposed amendments to codify the exemptive relief that has been granted.
e. Expanding the Types of Securities that may be Purchased During an Issuer Bid
i. Current Regulatory Framework and Rationale for Intervention
Please refer to "Summary of Proposed Amendments and Proposed Changes -- Amending Exemptions and Codifying Common Discretionary Exemptions -- Issuer Bids -- Acquisition of Convertible Securities during an Issuer Bid" in the CSA Notice for a discussion of the current regulatory framework and rationale for intervention.
ii. Proposed Intervention
As we believe that it is appropriate for issuers to be able to repurchase, redeem, or otherwise acquire securities that are convertible into securities of the class subject to the bid, as well as securities of the class subject to the bid, in reliance on paragraph 4.6(a), (b), or (c), we have proposed amendments to expand the exemption in section 2.3(2) of NI 62-104 accordingly.
iii. Alternatives Considered
We considered maintaining the status quo, which would require that issuers apply on an individual basis for exemptive relief if they wish to acquire securities that are convertible into securities of the class subject to the issuer bid during the pendency of such bid. However, to reduce regulatory burden, we have proposed amendments to expand the exemption.
The primary stakeholders that will be impacted by the Proposed Amendments are: (i) issuers; (ii) bidders; (iii) investors; and (iv) dealers.
(i) Issuers
The Proposed Amendments will:
• provide transparency with respect to a bidder's or soliciting securityholder's aggregate economic position during the pendency of a take-over bid or proxy solicitation for which an information circular is required to be sent, respectively;
• provide issuers with the new Selective Repurchase Exemption, pursuant to which they will be able to conduct selective repurchases of securities of their own issue;
• expand the NRI Issuer Bid Exemption by codifying the exemptive relief that previously has been granted to issuers to add the additional categories of persons noted in Section C(iii)b.ii. above that may be excluded for the purposes of determining the Maximum Securityholder Condition;
• codify the exemptive relief that previously has been granted to issuers from the Extension Take Up Requirement to accommodate the mechanics of modified "Dutch auction" issuer bids;
• codify the exemptive relief that previously has been granted to issuers from the Proportionate Take Up Requirement in connection with modified "Dutch auction" issuer bids and extend this relief to issuer bids generally; and
• expand the types of securities that may be purchased during an issuer bid in reliance on an exemption in paragraph 4.6(a), (b), or (c) to include securities that are convertible into securities of the class subject to the bid.
(ii) Bidders
The Proposed Amendments will:
• require that bidders provide specified disclosure that will make transparent their aggregate economic position during the pendency of a take-over bid;
• remove the 5% Market Purchase Exemption, disentitling a bidder from making market purchases of the class of securities subject to its take-over bid during the pendency of the bid; and
• expand the NRI TOB Exemption by codifying the exemptive relief that previously has been granted to bidders to add the additional categories of persons noted in Section C(ii)b.ii. above that may be excluded for the purposes of determining the Maximum Securityholder Condition directly to the NRI TOB Exemption.
(iii) Investors
The Proposed Amendments will:
• require that soliciting securityholders provide specified disclosure that will make transparent their aggregate economic position during the pendency of a proxy solicitation for which an information circular is required to be sent, including by providing that, for select early warning reporting purposes, such securityholders have acquired control or direction over a security if they are a counterparty to an equity equivalent derivative of the security;
• enhance the integrity of the issuer bid, take-over bid, and early warning reporting regimes through clarifying amendments and supplemental policy guidance;
• provide issuers with the new Selective Repurchase Exemption, pursuant to which investors will be able to sell securities to the issuer of those securities;
• expand the NRI TOB Exemption and NRI Issuer Exemption by codifying the exemptive relief that has been granted to bidders and issuers, respectively, to add the additional categories of persons noted in Sections C(ii)b.ii and C(iii)b.ii. above that may be excluded for the purposes of determining the Maximum Securityholder Condition; and
• codify the exemptive relief that has been granted from the Proportionate Take Up Requirement in connection with modified "Dutch auction" issuer bids and extend this relief to issuer bids generally.
(iv) Dealers
The Proposed Amendments will require that a bidder or soliciting securityholder describe a past or present relationship with a counterparty to a related financial instrument or any agreement, arrangement, or understanding that has the effect of altering, directly or indirectly, the economic exposure of the bidder or soliciting securityholder to an issuer, as well as relationships with an affiliate of the counterparty, that could be perceived to affect that counterparty's decision to acquire, dispose of, or vote securities of the issuer, including identification of the counterparty and the affiliate.
The OSC considers the impact of proposed rulemaking on the OSC's mandate to:
• provide protection to investors from unfair, improper or fraudulent practices;
• foster fair, efficient, and competitive capital markets and confidence in the capital markets;
• foster capital formation; and
• contribute to the stability of the financial system and the reduction of systemic risk.
The Proposed Amendments will impact the investor protection, capital formation, fairness, efficiency, competitiveness and confidence in the capital markets components of the OSC's mandate. Specifically, the Proposed Amendments facilitate:
• the protection of market participants and confidence in the capital markets by enhancing the integrity of the issuer bid, take-over bid, and early warning reporting regimes through clarification and modernization of the applicable requirements, the provision of more accurate and timely information to the market, and better alignment with evolving policy considerations;
• efficiency by reducing regulatory burden through clarifying amendments and supplemental policy guidance, and the codification of frequently granted exemptive relief, which in turn increases certainty and provides greater flexibility to market participants to transact on a timely basis; and
• capital formation and competitive Canadian capital markets by easing restrictions on repurchases by issuers and providing investors with more liquidity for larger blocks of securities, thereby enhancing the attractiveness of, and investments in, Canadian reporting issuers.
The following section analyzes the anticipated costs and benefits to the affected stakeholders mentioned above. Due to the nature of the Proposed Amendments, there are some challenges in estimating the benefits to stakeholders with meaningful precision.
(i) Benefits to stakeholders
We are proposing to codify certain exemptive relief and to expand the availability of certain existing exemptions. These Proposed Amendments will result in reduced costs for affected stakeholders who would otherwise have been required to apply for exemptive relief. We estimate that each applicant's General Counsel{2} and external counsel{3} would have spent approximately 5 hours and 15 hours, respectively, to prepare and file the application. This translates into an estimated savings of approximately $9,700 per applicant. Table 1 sets out the estimated cost savings associated with each of the proposals.
Table 1: Estimated cost savings from the codification of exemptive relief
Description of Proposed Amendment
Stakeholder category
Number of impacted stakeholders annually{4}
Total cost savings per impacted stakeholder
Total aggregate annual cost savings
i.
Expanding the NRI Issuer Bid Exemption and the NRI Take-Over Bid Exemption.
Non-reporting issuers and bidders
1
$9,700
$9,700
ii.
Codification of exemptive relief granted to accommodate the mechanics of modified Dutch auction issuer bids.
Issuers
14
$9,700
$135,800
iii.
Codification of exemptive relief that has been granted to facilitate Proportionate Tenders for issuer bids.
Issuers
0{5}
$9,700
N/A
iv.
Expanding the exemption in subsection 2.3(2) of NI 62-104 to permit purchases, redemptions or other acquisitions of securities convertible into the class subject to the issuer bid during the pendency of the bid.
Issuers
0{6}
$9,700
N/A
Total estimated cost savings
$145,500
{4} The estimated number of impacted stakeholders is based on OSC staff's review of certain continuous disclosure and other documents for the period between January 1, 2021 and December 31, 2023.
{5} No issuer applied for relief from the Proportionate Take Up Requirement on a standalone basis over the three-year review period.
{6} No issuer applied for relief in respect of section 2.3(2) of NI 62-104 over the three-year review period.
a. Issuers
The Proposed Amendments benefit issuers as follows:
• Assist issuers in assessing the outcome of a take-over bid or proxy solicitation campaign, as applicable, and potential alternative options that may be available to the issuer through increased transparency of bidders' and soliciting securityholders' aggregate economic positions. While we are unable to quantify this benefit with meaningful precision, we believe that issuers will incur cost savings as additional information will allow an issuer's board of directors to make more expedient and better-informed decisions.
• Enhance the attractiveness of, and investments in, Canadian reporting issuers by allowing issuers to utilize the Selective Repurchase Exemption, which will provide an additional avenue for liquidity for larger blocks of securities. While we are unable to quantify this benefit with meaningful precision, the Selective Repurchase Exemption will allow issuers to save the costs associated with applying for and obtaining formal exemptive relief, and provide issuers with greater flexibility to allocate their capital and undertake selective repurchases in a timely manner.
• Save issuers the costs associated with applying for and obtaining formal exemptive relief from the NRI Issuer Bid Exemption to exclude Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons for the purposes of calculating the Maximum Securityholder Condition, and provide issuers with greater flexibility in respect of transaction timing.
• Save issuers the costs associated with applying for and obtaining formal exemptive relief from the Extension Take Up Requirement to accommodate the mechanics of modified "Dutch auction" issuer bids.
• Save issuers the costs associated with applying for and obtaining formal exemptive relief from the Proportionate Take-Up Requirement, and enhance the attractiveness of, and investments in, Canadian reporting issuers by providing flexibility for securityholders in terms of their degree of participation in the issuer bid.
• Save issuers the costs associated with applying for and obtaining formal exemptive relief to acquire securities that are convertible into securities of the class subject to the bid in reliance on paragraph 4.6(a), (b), or (c) of NI 62-104.
b. Bidders
• Save bidders the costs associated with applying for and obtaining formal exemptive relief from the NRI TOB Exemption to exclude Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons for the purposes of calculating the Maximum Securityholder Condition, and provide bidders with greater flexibility in respect of transaction timing.
c. Investors
• Improve investors' understanding of the circumstances in which reporting obligations are triggered, thereby reducing the time and costs associated with compliance.
• Provide an additional avenue for liquidity for larger blocks of securities by virtue of the Selective Repurchase Exemption.
• Allow investors of closely-held, non-reporting issuers to exit their positions without the need for the issuer or a bidder to apply for and obtain formal exemptive relief by virtue of the expanded NRI Issuer Bid Exemption and NRI TOB Exemption.
• Provide investors with flexibility in terms of their degree of participation in an issuer bid with a Proportionate Tender option.
(ii) Costs to stakeholders
Quantifying the anticipated impact of the Proposed Amendments begins with establishing the baseline and the incremental impact of the proposals.
a. Establishing the baseline
The baseline represents the current state of the market or what we expect to happen in the absence of the proposed intervention. The Proposed Amendments only apply in certain scenarios and to stakeholders engaging in certain transactions. In 2024, OSC staff conducted a review of certain public disclosure filed during the period between January 1, 2021 and December 31, 2023 to establish a baseline for the Proposed Amendments, where possible and practicable.{7} The results of this review provide a snapshot of the number of stakeholders that would have been impacted by the Proposed Amendments had they been in force during that time, which can be extrapolated to provide a best estimate. We note that the number of transactions that may occur within any period of time will vary based on a variety of factors, and we estimate that the Proposed Amendments will have no impact on the vast majority of stakeholders in the ordinary course.
b. Establishing the incremental impact
Once the baseline is established, we assessed the incremental tasks and activities that impacted stakeholders would be required to undertake as a result of the Proposed Amendments. This includes, for example, adapting existing transaction monitoring processes to reflect adjustments to, and clarifications of, reporting thresholds, and the requirement to issue a news release concerning certain transactions. In a nutshell, these are new requirements that impacted stakeholders would not have been required to undertake in the absence of the Proposed Amendments.
c. Key assumptions and observations
The estimated compliance costs are based on the following assumptions and observations:
i. All reporting and non-reporting issuers and investors have existing policies and procedures that can be updated to reflect the new requirements.
ii. We anticipate that some of the incremental tasks or activities will be completed by in-house counsel and others will be completed by external counsel. We expect that in-house activities will be completed by the impacted stakeholder's General Counsel.{8} We assume that external counsel will be provided by a lawyer with approximately 10 years of experience.{9}
iii. Although issuers and investors will incur initial or Year 1 implementation costs, we do not anticipate any significant ongoing costs.
iv. We do not anticipate that there will be any significant information technology changes as a result of the Proposed Amendments.
d. Estimated compliance costs
The following section outlines the anticipated incremental activities resulting from the Proposed Amendments and their associated costs. Estimates are based on OSC staff's assessments of the incremental impact of the Proposed Amendments. For the purposes of this analysis, the estimated number of impacted issuers and investors is based on the baseline established by OSC staff's review (See Appendix 1 for additional detail on staff's cost benefit research).
i. Learning about the regulation
The Proposed Amendments and Proposed Changes do not apply to issuers and investors in the ordinary course as they relate to control transactions and the acquisition of significant blocks of securities of reporting issuers. We anticipate that some reporting issuers and investors that are or may become subject to the early warning system will review the final rule amendments and changes, conduct a gap analysis against existing policies and procedures, and update them as necessary. The review by these stakeholders may entail requesting a legal memo from external counsel on the impact of the final amendments and changes. We estimate that external counsel will spend approximately 15 hours preparing the legal memo, resulting in an additional cost of approximately $8,900. As the legal memo can be utilized for multiple clients, the entirety of this cost may not be passed on to each requesting stakeholder. We note that not all stakeholders will incur this cost, only those who have engaged external counsel to assist with understanding the final amendments and changes. Additionally, we expect that several law firms will publish summaries of the final amendments and changes and their impacts on their websites, which can be accessed by any stakeholder free of charge. We estimate that impacted stakeholders' General Counsel (if applicable) will spend approximately 5 hours reviewing the final amendments and/or law firm materials, resulting in a cost of approximately $800 per stakeholder. We do not have sufficient information to estimate the total number of impacted stakeholders and therefore are not able to calculate aggregate costs.
ii. Estimated incremental compliance costs
a. Proposed Amendments that clarify the CSA's expectations regarding certain disclosure
Approximately half of the Proposed Amendments fall in this category. For example, we are proposing guidance that clarifies the disclosure and timing requirements for acquirors' plans or future intentions. This guidance does not impose new requirements on stakeholders, but we expect that stakeholders will update existing policies and procedures as needed. As such, the associated costs are included in the Learning about the regulation category.
b. Proposed Amendments with direct cost implications for impacted stakeholders
Table 2 sets out the Proposed Amendments we anticipate will have direct cost implications for impacted stakeholders. We estimate the costs per stakeholder as well as total aggregate costs. Please refer to section C above and the CSA Notice for a full description of the Proposed Amendments.
Table 2: Proposed Amendments with direct cost implications for impacted stakeholders
Description of Proposed Amendment
Stakeholder category
Number of impacted stakeholders annually{10}
Total cost per impacted stakeholder{11}
Total aggregate annual costs
i.
Requiring prescribed disclosure in a take-over bid circular of equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer.
Bidders
3
$9,800{12}
$29,400
ii.
Requiring that an offeror issue and file a news release containing prescribed disclosure if there is a change in respect of equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer during the pendency of a take-over bid.
Bidders
3
$7,400{13}
$22,200
iii.
Deeming an acquiror or a person acting jointly or in concert with the acquiror to have acquired and to have control or direction over a security during the pendency of a proxy solicitation campaign if the acquiror is a counterparty to an equity equivalent derivative of the security.
Soliciting Securityholders
7
$7,400{14}
$51,800
iv.
Requiring prescribed disclosure in a proxy solicitation for which an information circular is required to be sent of beneficial ownership, equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer.
Soliciting Securityholders
7
$6,500{15}
$45,500
v.
Requiring prescribed disclosure in a solicitation in reliance on the public broadcast, speech, or publication exemption of beneficial ownership.
Soliciting Securityholders
7
$160{16}
$1,120
Total estimated aggregate annual costs
$150,020
{10} The estimated number of impacted stakeholders is based on OSC staff's review of certain continuous disclosure and other documents for the period between January 1, 2021 and December 31, 2023.
{11} We have assumed that disclosure pertaining to equity equivalent derivatives and agreements, arrangements, or understandings that alter economic exposure to an issuer would have been applicable to each bidder and soliciting securityholder. Accordingly, the estimates below represent the maximum total aggregate annual costs.
{12} We anticipate that bidders would have incurred compliance costs associated with preparing and including the prescribed disclosure in the take-over bid circular. We estimate that each bidder's General Counsel and external counsel would have spent approximately 5 hours and 15 hours to ensure compliance with the Proposed Amendments, respectively. This would result in additional in-house compliance costs of approximately $800 and $9,000 in additional external costs per bidder.
{13} We anticipate that bidders will incur compliance costs associated with preparing and including the prescribed disclosure in a news release, as well as the costs of issuing and filing the news release. We estimate that each bidder's General Counsel and external counsel will spend approximately 3 hours and 10 hours to ensure compliance with the Proposed Amendments, respectively. This would result in additional in-house compliance costs of approximately $500 and $6,000 in additional external counsel costs per bidder. Bidders would also incur costs of approximately $900 to issue and file a news release.
{14} We anticipate that soliciting securityholders will incur compliance costs associated with assessing whether the soliciting securityholder has a reporting obligation, and, if so, filing an early warning report and issuing and filing a news release. We estimate that each soliciting securityholder's General Counsel and external counsel will spend approximately 3 hours and 10 hours to ensure compliance with the Proposed Amendments, respectively. This would result in additional in-house compliance costs of approximately $500 and $6,000 in additional external counsel costs per soliciting securityholder. Soliciting securityholders would also incur costs of approximately $900 to issue and file a news release.
{15} We anticipate that soliciting securityholders will incur compliance costs associated with preparing prescribed disclosure in an information circular. We estimate that each soliciting securityholder's General Counsel and external counsel will spend approximately 3 hours and 10 hours to ensure compliance with the Proposed Amendments, respectively. This would result in additional in-house compliance costs of approximately $500 and $6,000 in additional external counsel costs per soliciting securityholder.
{16} We anticipate that soliciting securityholders will incur nominal compliance costs associated with preparing prescribed disclosure in document filed for the purposes of relying on the public broadcast exemption. We estimate that each soliciting securityholder's General Counsel will spend approximately 1 hour to ensure compliance with the Proposed Amendments, which would result in additional in-house compliance costs of approximately $163 per soliciting securityholder.
c. Introduction of Selective Repurchase Exemption
We are proposing to introduce the Selective Repurchase Exemption, a new exemption. Issuers are not obligated to make use of the Selective Repurchase Exemption, and as it is new, we are unable to estimate the number of issuers that will make use of it. While issuers that do so will incur minimal compliance costs, we believe that the benefits associated with not having to formally apply for, and receive, exemptive relief outweigh the incremental compliance costs. We anticipate that each issuer's General Counsel and external counsel will spend approximately 1 hour and 5 hours to ensure compliance with the proposed amendments, respectively. This would result in additional in-house compliance costs of approximately $160 and $3,000 in additional external counsel costs per issuer that relies on the Selective Repurchase Exemption. The issuer would also incur costs of approximately $900 to issue and file a news release.
The benefits of the Proposed Amendments include cost savings for issuers and bidders who will no longer have to apply for and obtain certain types of exemptive relief. The Proposed Amendments are also intended to provide greater clarity for investors regarding the circumstances in which reporting obligations are triggered. While impacted stakeholders will incur minimal compliance costs as a result of the Proposed Amendments, we believe that these costs are proportionate to the anticipated benefits.
The following provisions of the Act provide the Commission with the authority to make the Proposed Amendments and Proposed Changes:
• Paragraph 143(1)28 of the Act authorizes the Commission to make rules regulating take-over bids, issuer bids, insider bids, going-private transactions, business combinations and related party transactions, including,
• providing for the matters that, under Part XX, may be specified by regulation or required by the regulations or that, under Part XX, must or may be determined or done in accordance with the regulations,
• restricting the ability of a person or company to acquire or sell a security before, during or after an offer to acquire, acquisition, redemption, related party transaction, business combination or similar transaction,
• prescribing the disclosure, certification, delivery or dissemination of any circular, notice, report or other document required to be filed or delivered to a person or company,
• prescribing requirements, prohibitions, restrictions and thresholds in respect of early warning,
• prescribing requirements to be met by a person or company that acquires an interest or right in or to, or a right or obligation associated with, a related financial instrument,
• prescribing exemptions from the requirements of Part XX or the regulations related to it, and
• removing or varying exemptions from the requirements of Part XX or the regulations related to it;
• Paragraph 143(1)35 of the Act authorizes the Commission to prescribe requirements relating to derivatives; and
• Paragraph 143(1)39 of the Act authorizes the Commission to make rules requiring or respecting the media, format, preparation, form, content, execution, certification, dissemination and other use, filing and review of all documents required under or governed by this Act, the regulations or the rules, all applications to the Commission under the Business Corporations Act and all documents determined by the regulations or the rules to be ancillary to the documents.
The Commission is not relying on any unpublished study, report, or other written material in proposing the Proposed Amendments.
Appendix 1 |
OSC Staff Cost Benefit Research |
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Appendix 2 |
Proposed Amendments to OSC Rule 48-501 |
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Appendix 3 |
Proposed Amendments to OSC Rule 71-801 |
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Appendix 4 |
Proposed Amendments to OSC Rule 71-802 |
{1} This Annex does not include an analysis of the anticipated costs and benefits of the Proposed Changes.
{2} The General Counsel has an estimated hourly rate of $163 based on Counselwell's 2025 Canadian In-House Lawyer Salary Report. Available here: https://www.counselwell.ca/report-canada-2025-in-house-lawyer-salary
{3} External counsel has an estimated hourly rate of $591 based on the 2024 Canadian Lawyer report "The state of the Canadian legal fee landscape: an in-depth report". This report is available to subscribers only.
{7} Appendix 1 sets out the results of this review.
{8} The General Counsel has an estimated hourly rate of $163 based on Counselwell's 2025 Canadian In-House Lawyer Salary Report. Available here: https://www.counselwell.ca/report-canada-2025-in-house-lawyer-salary
{9} External counsel has an estimated hourly rate of $591 based on the 2024 Canadian Lawyer report "The state of the Canadian legal fee landscape: an in-depth report". This report is available to subscribers only.
Proposed Amendment |
Research & Findings |
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Equity Equivalent Derivatives |
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1. |
Added Item 8.1 to Form 62-104F1 to require prescribed disclosure in a take-over bid circular if the offeror, or any person acting jointly or in concert with the offeror (i) has, or had at any time during the 6-month period preceding the date of the take-over bid, an interest in, or right or obligation associated with, a related financial instrument involving a voting or equity security of the offeree issuer, including an equity equivalent derivative, or (ii) is a party, or has been a party at any time during the 6-month period preceding the date of the take-over bid, to any agreement, arrangement, or understanding that has or had the effect of altering, directly or indirectly, the economic exposure of the offeror or the person acting jointly or in concert with the offeror to the offeree issuer and disclosure is not otherwise required by (i) above. |
We identified a total of 9 take-over bid circulars that were filed between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, up to 9 offerors would have been required to provide this disclosure. |
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2. |
Added section 2.7.1 to NI 62-104 to require an offeror to issue and file a news release containing prescribed disclosure before the opening of trading on the business day following the relevant action if, during the pendency of a take-over bid, an offeror (i) acquires or disposes of an interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the offeree issuer, including an equity equivalent derivative, or there is a change in an offeror's interest in, or right or obligation associated with, the related financial instrument, or (ii) enters into, terminates, or amends an agreement, arrangement, or understanding that has the effect of altering the offeror's economic exposure to the offeree issuer and disclosure is not otherwise required by (i) above. |
We identified a total of 9 take-over bid circulars that were filed between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, up to 9 offerors would have been required to provide this disclosure. |
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3. |
Added, within Item 8.1 of Form 62-104F1 and section 2.7.1 of NI 62-104, the requirement to describe any past or present relationship between the offeror or any joint actor and a counterparty, or an affiliate of the counterparty, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of, or vote securities of the offeree issuer, or, if there is no such relationship, a statement to that effect. |
We identified a total of 9 take-over bid circulars that were filed between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, up to 9 offerors would have been required to provide this disclosure. |
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4. |
Added subsection 5.1(6) to NI 62-104 to provide that, for the purposes of sections 5.2 and 5.4 of NI 62-104 only and only during the pendency of a proxy solicitation campaign, an acquiror or person acting jointly or in concert with the acquiror has acquired, and has, control or direction over a security, including an unissued security, if the acquiror or the person acting jointly or in concert with the acquiror is a counterparty to an equity equivalent derivative of the security. |
We identified 22 information circulars that were filed by soliciting securityholders between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, the persons making these solicitations may have been required to file EWRs if they were counterparties to equity equivalent derivatives that, on an as-converted basis, when aggregated with their securities of that class, crossed an early warning reporting threshold. |
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5. |
Added Items 6.6, 6.7, and 6.8 to Form 51-102F5, which apply to a solicitation made other than by or on behalf of management of a company, to require prescribed disclosure in an information circular of certain persons' or companies' (i) beneficial ownership of, or control or direction over, voting securities of the company, (ii) interest in, or right or obligation associated with, a related financial instrument involving voting or equity securities of the company, including an equity equivalent derivative, and (iii) agreements, arrangements, or understandings that have the effect of altering, directly or indirectly, the persons' or companies' economic exposure to the company and disclosure is not otherwise required by (ii) above. |
We identified a total of 22 information circulars that were filed by soliciting securityholders between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, the persons making these solicitations would have been required to include the prescribed disclosure. |
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6. |
Added, within Items 6.7 and 6.8 of Form 51-102F5, the requirement to describe any past or present relationship between a person or company referred to in Item 6.6 of Form 51-102F5 and a counterparty, or an affiliate of the counterparty, that, to a reasonable person, could be perceived to affect that counterparty's decision to acquire, dispose of or vote securities of the company, or, if there is no such relationship, a statement to that effect. |
We identified a total of 22 information circulars that were filed by soliciting securityholders between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, the persons making these solicitations would have been required to include the prescribed disclosure. |
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7. |
Amended clause 9.2(4)(c)(ii) of NI 51-102 to require a person or company soliciting proxies in reliance on the public broadcast, speech, or publication exemption in subsection 9.2(4) to provide the prescribed disclosure of certain persons' or companies' beneficial ownership of, or control or direction over, voting securities of the company. |
We identified 21 issuers in respect of which proxies were solicited in reliance on the public broadcast exemption between January 1, 2021 and December 31, 2023. If this requirement had been in effect at such time, the persons making these solicitations would have been required to include the prescribed disclosure. However, we note that at least some disclosure relating to the soliciting securityholder's ownership position was provided in 14 of these instances. |
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Early Warning Reporting Triggers and Disclosure |
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8. |
Added subsection 5.1(3) to NI 62-104 to deem securities beneficially owned, or over which control or direction is exercised, by a person at the time that an issuer becomes a reporting issuer to have been acquired by the person at that time in order to clarify that early warning filings are required at such time. |
We identified 582 issuers (other than credit support issuers) that became reporting issuers between January 1, 2021 and December 31, 2023. Of those, 389 issuers (or 66.84%) had at least 1 securityholder with a 10% interest in a class of voting or equity securities at the time they became reporting issuers. Of those, an EWR was filed in connection with 104 (or 26.74%) of those issuers becoming reporting issuers, although the filing of the EWR did not occur promptly following the issuer becoming a reporting issuer in most instances. |
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We have also added subsections 5.2(5) and 5.3(3) to clarify that the news release requirement and moratorium provisions, respectively, do not apply in these circumstances. |
If we take the projected number of new reporting issuers that have significant securityholders at the time they become a reporting issuer, multiplied by 1.87 (being the average number of significant securityholders per issuer), the proposed requirement will result in an additional 242 EWRs per year. We note, however, that many of these significant securityholders would reasonably be expected to trigger an EWR filing requirement within 12 to 24 months following the issuer becoming a reporting issuer such that the practical effect of the requirement may only be to alter the timing of the filing of the significant securityholder's initial EWR. |
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9. |
Added subsections 5.1(4) and (5) to NI 62-104 to deem each person acting jointly or in concert with other persons in respect of an issuer to have, respectively: (i) acquired the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by such other persons when they began acting jointly or in concert with each other; and (ii) disposed of the securities of the issuer that are beneficially owned, or over which control or direction is exercised, by such other persons when they cease acting jointly or in concert with each other. |
It is not practicable for us to discern the historical applicability of these provisions, and accordingly, to estimate its potential impact. |
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10. |
Added subsection 4.3(5) to NI 62-103 to permit an EII that is not filing reports under the AMR system to enter or re-enter the AMR system, provided that the EII promptly issues and files a news release that includes a statement that the EII is eligible to file reports under the AMR system and that it intends to do so for the reporting issuer, and subsequently files a report in accordance with paragraph 4.5(a) of NI 62-103. |
We identified 10 reports that had been filed on Form 62-103F2 Required Disclosure by an Eligible Institutional Investor under Section 4.3 between January 1, 2021 and December 31, 2023. If this provision had been in effect at such time, these disqualified EIIs would have been able to re-enter the AMR system once the circumstances surrounding the disqualification had ended, ceased, or were no longer present. |
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Amending Exemptions & Codifying Common Discretionary Exemptions{1} |
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11. |
Amended sections 4.3 [non-reporting issuer exemption] (take-over bids) and 4.9 [non-reporting issuer exemption] (issuer bids) of NI 62-104 to expand these exemptions by codifying the exemptive relief that has been granted to expand the categories of persons permitted to be excluded for the purposes of calculating the Maximum Securityholder Condition to include Employee Adjacent Persons and spouses of Qualifying Persons or Employee Adjacent Persons where the Qualifying Person or Employee Adjacent Person has control or direction over the subject issuer's securities that are beneficially owned by the spouse. |
We identified 1 decision relating to section 4.3 of NI 62-104, and 1 decision relating to section 4.9 of NI 62-104 between January 1, 2021 and December 31, 2023. If this provision had been in effect, these issuers would not have needed to apply for exemptive relief. |
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12. |
Added (a) subsection 2.32(4.1) to NI 62-104 to codify exemptive relief granted to allow issuers to extend issuer bids without first taking up all securities deposited under the bid and not withdrawn to accommodate the mechanics of modified "Dutch auction" issuer bids; and (b) subsection 2.26(3.1) to NI 62-104 to codify exemptive relief granted (in the "Dutch auction" issuer bid context) to allow issuers to take up and pay for securities deposited under an issuer bid in a manner that permits tendering securityholders to maintain their proportionate ownership in the issuer, and made the associated amendments to Form 62-104F2 Issuer Bid Circular. |
We identified 5 decisions granting relief from both sections 2.32(4) and 2.26 of NI 62-104, and 14 decisions granting relief from section 2.32(4) of NI 62-104 between January 1, 2021 and December 31, 2023. If these provisions had been in effect: (a) these 19 issuers would not have needed to apply for exemptive relief; (b) all 43 issuers that conducted issuer bids pursuant to a modified "Dutch auction" procedure during that period would have been able to extend their bids without first taking up all securities deposited under the bid and not withdrawn; and (c) all 60 issuers that conducted issuer bids during this period would have been able to permit tendering securityholders to maintain their proportionate ownership in the issuer, if so elected by the particular securityholder. |
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No issuers have applied for relief from only section 2.26 of NI 62-104. |
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13. |
Amended section 2.3(2) of NI 62-104 to expand the exemption to permit purchases, redemptions or other acquisitions of securities convertible into the class subject to the issuer bid in reliance on the "issuer acquisition or redemption exemption" during the pendency of the bid. |
We identified, based on a search of our internal databases, 1 inquiry and no applications relating to this provision. |
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14. |
Removed the exemption in section 2.2(3) of NI 62-104 that permitted offerors to make market purchases of up to 5% of the outstanding securities of the class subject to the bid during the pendency of the bid. |
We identified only 1 instance between January 1, 2021 and December 31, 2023 where a bidder issued and filed a news release disclosing the use of the 5% Market Purchase Exemption. |
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Other |
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15. |
Amended references to "3 business days" in paragraph 2.30(1)(c), clause 2.31.1(b)(iv), and subsections 2.32(2) and 2.32.1(2) of NI 62-104 to "promptly". |
It is not practicable for us to discern the historical applicability of these provisions and, accordingly, to estimate its potential impact. We note that we are specifically requesting stakeholder feedback on whether there are any practical impediments or challenges to shortening the tendering process payment period from the current 3 business day maximum. |
{1} The Research & Findings for this section are based on OSC staff's review of inquiries received by OSC staff and applications that were filed in Ontario.
1. Ontario Securities Commission Rule 48-501 Trading During Distributions, Formal Bids and Share Exchange Transactions is amended by this Instrument.
2. Section 3.1 is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. This Instrument comes into force on [x].
1. Ontario Securities Commission Rule 71-801 Implementing the Multijurisdictional Disclosure System is amended by this Instrument.
2. Subsection 1.1(3) is amended by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. This Instrument comes into force on [x].
1. Ontario Securities Commission Rule 71-802 Implementing National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers is amended by this Instrument.
2. Subsection 1.1(1) is amended in the definition of "NI 62-104" by replacing "National Instrument 62-104 Take-Over Bids and Issuer Bids" with "National Instrument 62-104 Take-Over Bids, Issuer Bids and the Early Warning System".
3. This Instrument comes into force on [x].
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Filing #: 06440691
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06440352
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06440571
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06437891
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06438449
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06401882
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06396169
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06427329
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06393490
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Issuer Name:
Principal Regulator:
Type and Date:
Offering Price and Description:
Filing #: 06393490
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Type |
Company |
Category of Registration |
Effective Date |
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|||
Voluntary Surrender |
Perennial Asset Management Corp. |
Commodity Trading Manager, Exempt Market Dealer, Portfolio Manager, and Investment Fund Manager |
April 28, 2026 |
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|||
New Registration |
Capital West Mortgage Investor Services Inc. |
Exempt Market Dealer |
May 8, 2026 |
|
|||
Change in Registration Category |
Markham Centre Financial Securities Inc. |
From: Exempt Market Dealer |
May 12, 2026 |
|
|||
|
|
To: Exempt Market Dealer, Portfolio Manager and Investment Fund Manager |
|
|
|||
Suspended (Regulatory Action) |
QUANTUS INVESTMENT CORP. |
Portfolio Manager and Exempt Market Dealer |
May 11, 2026 |