CSA Proposes Amendments to the Issuer Bid, Take-Over Bid and Early Warning Regimes

On May 14, 2026, the Canadian Securities Administrators (CSA) published a wide-ranging Notice and Request for Comment proposing amendments and changes to the Canadian issuer bid, take-over bid and beneficial ownership reporting regimes (collectively, the Proposed Amendments). The Proposed Amendments are intended to increase share buy-back flexibility, enhance derivative transparency and reduce regulatory burden and enhance the integrity of the issuer bid, take-over bid and early warning reporting regimes. Comments are open until August 12, 2026.

This update summarizes the key elements of the Proposed Amendments and highlights practical implications for issuers, bidders, activists and institutional investors.

Selective Repurchase Exemption

One of the most significant proposals is a new exemption that would permit issuers to repurchase their securities through bilateral private agreements (the SRE). There is currently no equivalent to the take-over bid "private agreement" exemption in the issuer bid context, and Canadian securities laws generally require issuers to rely on the comprehensive issuer bid requirements set forth in National Instrument 62-104 Take-Over Bids and Issuer Bids or seek exemptive relief for selective repurchases which, according to observations received by the CSA, is particularly restrictive relative to comparable US rules.

The SRE would be available where all of the following conditions are satisfied:

• The 5/5/5 parameters. Buy-backs must not exceed 5% of the outstanding securities of a class within any 12-month period and could involve no more than five persons in no more than five transactions during that period. The limits would operate independently, meaning an issuer could transact multiple times with the same shareholder.
• Below-market pricing. The consideration paid, including commissions and brokerage fees, must be less than the closing market price of the securities on their principal trading market on the date of the bid. This is in contrast to the similar exemption applicable to the take-over bid "private agreement" exemption, which permits the purchase price to not exceed 115% of the market price at the time.
• Market depth. A liquid market in the class must exist at the date of the bid (the CSA estimates approximately 75% of TSX-listed issuers and fewer than 10% of TSX Venture Exchange-listed issuers would qualify).
• Board oversight. The board must determine that the bid would not reasonably be expected to materially reduce market liquidity or have a significant negative effect on market price.
• Clean hands. At the date of the bid, neither the issuer nor, to the issuer's knowledge after reasonable inquiry, the selling securityholder may have knowledge of any material fact or material change regarding the issuer or its securities that has not been generally disclosed.
• Post-trade disclosure. The issuer must issue and file a news release before the opening of trading disclosing prescribed particulars of the transaction.

Securities acquired under the SRE would not reduce NCIB capacity, meaning an issuer could potentially repurchase up to approximately 20% of a class within a 12‑month period through a combination of the SRE, the employee, officer, director and consultant exemption, and the NCIB exemption.

Enhanced Disclosure of Equity Equivalent Derivatives

The Proposed Amendments would introduce new disclosure obligations regarding equity equivalent derivatives in take-over bid circulars and proxy circulars. Rather than adopting a broad aggregation model combining beneficial ownership and economic interests for purposes of the 10% early warning report (EWR) threshold, the CSA has instead focused the new disclosure obligations on circumstances where shareholders are being asked to make tendering or voting decisions. A new defined term, "equity equivalent derivative," would capture derivatives providing economic exposure substantially equivalent to beneficial ownership of the reference securities. The CSA has proposed guidance that a derivative or combination of derivatives providing a rate of return between 90% and 110% of the return on the reference security would generally meet this standard.

Bidder-side disclosure. Take-over bid circulars would be required to disclose any interest in equity equivalent derivatives or other arrangements affecting economic exposure to the offeree issuer, with a six-month look-back period. During the pendency of a bid, offerors would be required to issue a news release before the opening of trading on the next business day following any change in such positions, and to describe any relationship between the offeror (or joint actor) and a counterparty that could be perceived to affect the counterparty's investment or voting decisions.

Soliciting securityholder disclosure. A new deeming provision would, during the pendency of a proxy solicitation for which an information circular is required to be sent, deem an acquiror (or person acting jointly or in concert with the acquiror) that is a counterparty to an equity equivalent derivative to have acquired and to have control or direction over the reference security, for purposes of sections 5.2 and 5.4 of NI 62‑104, with the effect that movements in a soliciting securityholder’s aggregate economic position through securities or equity equivalent derivatives could trigger EWR at the 10% threshold during the solicitation period. The deeming provision would not apply to solicitations made in reliance on the “quiet solicitation” or “public broadcast” exemptions. Information circulars would also be required to include prescribed disclosure of derivative positions and arrangements affecting economic exposure.

Public interest jurisdiction. The CSA has also proposed guidance in NP 62-203 indicating that the use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage securities regulators’ public interest jurisdiction. The CSA highlights concerns where investors do not clearly distinguish between beneficial ownership and economic interests in public disclosure, and where derivatives are used to exert pressure on counterparties or to communicate commercial incentives or disincentives in order to influence tendering or voting outcomes.

Early Warning Reporting: Enhanced Guidance on Plans and Intentions

The CSA has expressed concern that mandatory disclosure of acquirors' plans or future intentions  in EWRs frequently consists of broad, boilerplate language, and that acquirors may rely on such language to avoid updating their disclosure even as their intentions become more specific or concrete steps are taken toward a transaction.

Proposed guidance in section 3.3 of NP 62‑203 would clarify the CSA's expectations. In particular:

• An acquiror should reassess the accuracy of the disclosure in its most recent EWR each time a new filing obligation is triggered, including as a result of a change in its securityholding percentage;
• While the CSA generally considers that a change in plans or future intentions will occur at the latest upon the execution of a definitive agreement, the commencement of a take-over bid, or the public announcement of a proxy solicitation, a change may arise earlier, including where an acquiror or joint actor has taken "irrevocable" steps toward a potential transaction or has publicly disclosed intentions that differ from previously disclosed plans, even where the most recent EWR contains broad reservations of rights.
• Significant steps taken by an acquiror or 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.

The CSA also clarifies that this guidance applies to disclosure required under Forms 62‑103F2 and 62‑103F3 for eligible institutional investors.

Early Warning Reporting Triggers and Thresholds

Several other amendments to the early warning framework, which may impact significantly past practices, address identified gaps and interpretive uncertainties:

• Deemed acquisitions for new reporting issuers. Securities held at the time an issuer becomes a reporting issuer would be deemed to have been acquired at that time, requiring a 10% or greater holder to file an EWR (though the news release and moratorium requirements would not apply).
• Deemed joint actor relationships. The Proposed Amendments would deem persons acting jointly or in concert to have acquired each other's securities upon formation of the relationship, and to have disposed of those securities when the relationship ceases. The CSA proposed the change in response to Re NorthWest Copper Corp (2023 BCSECCOM 602), which highlighted that the current framework may not require early warning disclosure upon the formation of a joint actor relationship absent a subsequent acquisition of securities. The deeming would apply only for purposes of Part 5 of NI 62-104 and would not, on its own, cause the formation of a joint actor relationship to constitute a take-over bid.
• Subsequent EWR trigger and AMR thresholds. A new defined term "securityholding percentage" would confirm that subsequent EWRs are triggered by a 2% or greater change measured against the most recently reported percentage. Alternative monthly reporting (AMR) system thresholds would be confirmed as fixed 2.5% increments above 10% (e.g., 12.5%, 15%, 17.5%), and eligible institutional investors that are no longer disqualified from the AMR system would be permitted to enter or re-enter the regime through a prescribed news release and subsequent filing.
• EWR calculations. NP 62-203 would also provide guidance, with illustrative examples, on the calculation of early warning reporting thresholds. This includes whether convertible securities that are not exercisable within 60 days must be included in the numerator, and the limited circumstances in which a fully diluted basis of calculation may be appropriate.
• EII obligations during non-exempt bids. NP 62-203 would further clarify that eligible institutional investors exempt from the early warning requirements under section 4.1 of NI 62-103 are not relieved of the obligation 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. This is an important clarification given the uncertainty this issue has generated in practice.

Exemptions and Codifying Common Discretionary Exemptions

The Proposed Amendments include several changes aimed at reducing regulatory burden and codifying relief that the CSA has routinely granted on an application-by-application basis:

• Removal of the 5% market purchase exemption. The exemption permitting offerors to make market purchases of up to 5% of the outstanding securities of a class during a take-over bid would be repealed as the CSA considers it to be of limited utility following the 2016 non-waivable 50% minimum tender requirement and notes only one disclosed instance of reliance between 2021 and 2023. The removal of the exemption would impact the ability of an offeror in a competitive bid context to defray bid costs through a post-bid toehold, in the event the offeror ultimately lost the auction.
• Non-reporting issuer exemptions. The non-reporting issuer exemptions from the issuer bid and take-over bid requirements set forth in NI 62-104, applicable where there is no published market for the issuer's securities and no more than 50 securityholders, would be amended to expand the categories of persons excluded from the 50-securityholder calculation to include officers, directors, consultants, certain former employees, and spouses of any of the foregoing where the relevant person has control or direction over the spouse's securities.
• Codification of discretionary relief. The Proposed Amendments would codify several forms of exemptive relief routinely granted by the CSA, including permitting issuers conducting modified Dutch auction issuer bids to extend a bid without first taking up deposited securities, codifying proportionate tender options, and permitting repurchase of convertible securities during an issuer bid.
• Settlement timing. The amendments would also update settlement timing requirements following Canada's transition to T+1 settlement on May 27, 2024. The existing requirements to pay tendering securityholders within three business days would be replaced with a general obligation to pay "promptly," which the CSA proposes should be interpreted by reference to prevailing market settlement practices. The CSA has requested comment on whether payment should be reduced to a maximum of one business day to align with the T+1 settlement cycle.
• Additional policy guidance. The CSA has also proposed guidance in NP 62-203 on several matters, including bid conditions engaging public interest jurisdiction, mini-tender offers, the determination of the "date of the bid," offshore repurchases, the joint actor concept in proxy solicitations, and the issuer actions exemption under section 6.1 of NI 62-103

If you have questions regarding the Proposed Amendments or their potential impact, please reach out to the authors or any member of our Capital Markets group.