Takeover rules are much stricter on the Canadian market - Looks like we’re going to be sold3 Jun 2025 17:38
Canadian takeover rules are considered strict and designed to protect the interests of target shareholders and the market. These rules include a minimum bid period, a mandatory tender condition, and requirements for equal treatment and adequate disclosure, according to the Ontario Securities Commission.
Here's a more detailed breakdown:
Key Features of Canadian Takeover Rules:
Minimum Bid Period:
Takeover bids must remain open for at least 105 days, although target boards can negotiate a shorter period, down to a minimum of 35 days, notes Baker McKenzie.
Minimum Tender Condition:
A bidder must acquire more than 50% of the shares not already owned by the bidder and its associated parties to acquire any shares under the bid, according to a guide by Blakes.
Equal Treatment:
The bid must be made to all shareholders of the same class, ensuring fairness and equal opportunities for all.
Adequate Disclosure:
Target shareholders must receive a take-over bid circular with detailed information about the bid, its conditions, and any updates or changes, according to the OSC.
Bid Financing:
A cash takeover bid cannot be conditioned on the bidder obtaining financing.
Compulsory Acquisition:
If a bidder acquires 90% or more of the shares not already owned by the bidder and its affiliates within 120 days of the bid launch, it can likely proceed with a compulsory acquisition of the remaining shares under corporate law, notes Blake, Cassels.
Why the Rules are Strict:
Protection of Target Shareholders:
The rules aim to give target shareholders sufficient time to assess the bid, make informed decisions, and potentially explore alternative offers.
Leveling the Playing Field:
The rules help ensure that target boards have adequate time to respond to hostile bids and potentially negotiate with the bidder or find alternative acquirers.
Market Efficiency:
By requiring adequate disclosure and equal treatment, the rules contribute to a more efficient and transparent takeover process.
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