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

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Background

On May 14, 2026, the Canadian Securities Administrators (“CSA”) published a notice and request for comment in respect of a suite of proposed amendments to the issuer bid, take-over bid and beneficial ownership reporting regimes in Canada, marking the most significant set of changes in more than a decade.

The proposed amendments to National Instrument 62-104 Take-Over Bids and Issuer Bids (“NI 62-104”), National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (“NI 62-103”) and National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”), together with related changes to applicable policy guidance and other consequential amendments (collectively, the “Proposed Amendments”) are intended to provide issuers with greater flexibility to repurchase their own securities, enhance transparency of derivative-based economic interests in specified circumstances, reduce regulatory burden and improve the integrity of the regimes.

The 90-day comment period is open until August 12, 2026.

What’s New? Overview of Key Changes

The Proposed Amendments would, among other things:

• Create a new issuer bid exemption to permit selective repurchases by issuers of their own securities through bilateral private agreement, in specified circumstances.
• Introduce enhanced and targeted disclosure requirements for equity equivalent derivatives and other arrangements that alter economic exposure to an issuer in the context of take-over bids and proxy solicitations where an information circular is required to be sent.
• Clarify guidance for early warning reporting and alternative monthly reporting regimes, including when filings or meaningful disclosure of “plans or future intentions” are triggered.

In addition, the Proposed Amendments seek to codify exemptions from the issuer bid and take-over bid rules commonly granted on a discretionary relief basis, eliminate the 5% market purchase exemption from take-over bid requirements and modernize settlement timing for take-over bids. The following article provides a high-level summary of these key changes.

New Issuer Bid Exemption

The issuer bid regime restricts an issuer’s ability to repurchase its own securities. Absent exemptive relief or reliance on one of the limited exemptions set out in NI 62-104, an issuer that wishes to buy back its own securities must comply with the formal issuer bid requirements set out in NI 62-104.

Currently, the issuer bid regime in Canada does not allow bilateral private agreement share repurchases, as there is no exemption for issuer bids equivalent to the “private agreement” exemption for take-over bids in NI 62-104. The new selective repurchase exemption included in the Proposed Amendments is being framed as a significant enhancement intended to address this gap in light of criticism from stakeholders that the Canadian regime is overly restrictive. With the CSA noting an increased interest in selective repurchases, which are already permissible in the United States, the new exemption codifies circumstances in which issuers have previously had to apply for and obtain formal exemptive relief.

The new selective repurchase exemption would allow an issuer to selectively repurchase up to 5% of a class of its outstanding securities in a 12-month period through private, bilateral transactions rather than a formal issuer bid, subject to certain conditions:

• Transaction limits: Repurchases may be made from no more than five persons and in no more than five transactions during a 12-month period. This is intended to provide issuers with flexibility to repurchase from a particular person on up to five separate occasions, while precluding the establishment of de facto normal course repurchase programs.
  
• Discount: The consideration paid, including any brokerage fees or commissions, must be less than the closing market price of the securities on their principal trading market at the date of the bid.
  
• Liquid market: A “liquid market” (as defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions) must exist for the class of securities at the date of the bid. The issuer’s board must also determine that the repurchase would not reasonably be expected to materially reduce liquidity or have a significant negative effect on the price or value of the securities.
  
• Disclosure: Issuers relying on the exemption will be required to issue and file a news release after making the bid and before markets open on the next trading day disclosing prescribed transaction details, including the number or principal amount of securities acquired by the issuer within the preceding 12-month period in reliance on the exemption.

The conditions of the new exemption effectively codify several forms of discretionary relief that have commonly been granted in respect of selective repurchase transactions and are expected to reduce case-by-case applications, regulatory burden and transaction costs.

Purchases made in reliance on the new exemption would not reduce the issuer’s capacity to repurchase securities under other issuer bid exemptions, meaning that an issuer could potentially repurchase up to 20% of its securities of a class in a 12-month period by relying on multiple exemptions in NI 62-104 (e.g., a combination of the selective repurchase exemption, the employee, officer, director and consultant exemption, and the normal course issuer bid exemption).

In its request for comments, the CSA has asked stakeholders to consider the appropriateness of the proposed threshold conditions of the new exemption, as well as its interplay with existing exemptions and specifically whether it might curtail repurchases by issuers pursuant to formal issuer bids or normal course issuer bids. The CSA has also asked stakeholders to consider whether the exemption may give rise to concerns related to “greenmail” scenarios 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.

Enhanced Disclosure of Equity Equivalent Derivatives

The Proposed Amendments seek to introduce enhanced disclosure obligations in take-over bid and proxy circulars relating to equity equivalent derivatives and other arrangements that alter economic exposure to an issuer – such as total return swaps and contracts for difference. A new term, “equity equivalent derivative,” would cover derivatives providing an economic interest substantially equivalent to beneficial ownership of the related security, with accompanying guidance stating that derivatives providing a rate of return between 90% and 110% generally satisfy that standard.

The CSA has limited the requirements relating to equity equivalent derivatives to apply only in the context of formal take-over bids and proxy solicitations for which an information circular is required to be sent, rather than requiring broader aggregation of beneficial ownership and economic interests for the purposes of calculating early warning reporting triggers.

In declining to adopt the broader changes to beneficial ownership reporting, the CSA cited concern that it could impose a disproportionate burden without clear evidence that derivatives are being used abusively with any regularity in Canadian capital markets. The narrower disclosure requirements are intended to provide more balanced transparency in specified circumstances where securityholders are induced to make tendering or voting decisions.

For bidders, the Proposed Amendments would impose new disclosure requirements in take-over bid circulars for equity equivalent derivatives and other arrangements affecting economic exposure, with a six-month lookback. An offeror would have to disclose in its take-over bid circular relevant positions and arrangements from the six months preceding the bid. During the bid, the offeror would need to issue a news release before the opening of trading the next trading day if it acquires, disposes of or changes an interest in a related financial instrument or enters into, amends or terminates an arrangement that alters its economic exposure to the offeree issuer. Additional disclosure would also be required in the take-over bid circular with respect of certain counterparty relationships that could reasonably be perceived to affect that counterparty’s decision to acquire, dispose of or vote securities of the target issuer or, if there is no such relationship, a statement to that effect.

For soliciting securityholders, the Proposed Amendments would introduce a new provision that deems a soliciting securityholder (or joint actor) that is a counterparty to an equity equivalent derivative to have acquired, and to have control or direction over, the reference securities during a proxy solicitation campaign. This deeming provision (which would not apply to solicitations made in reliance on the “quiet solicitation” or “public broadcast” exemptions) is intended to ensure that a soliciting securityholder’s aggregate economic position, through beneficial ownership of securities or equity equivalent derivatives, will trigger early warning disclosure requirements during the solicitation period. Additional disclosure in information circulars would be required of ownership or control positions, derivative interests, other arrangements affecting economic exposure and certain counterparty relationships.

The CSA has proposed guidance in National Policy 62-203 Take-Over Bids and Issuer Bids (“NP 62-203”) and Companion Policy 51-102CP Continuous Disclosure Obligations to clarify its expectation that equity equivalent derivatives be disclosed in compliance with securities laws, having regard to circumstances where beneficial ownership may be deemed. The proposed guidance makes it clear that disclosure or use of equity equivalent derivatives in a manner that is abusive of the capital markets may engage securities regulators’ public interest jurisdiction. For example, public interest concerns may arise where disclosure does not clearly and accurately distinguish beneficial ownership from economic interests or where derivatives are used deliberately to build a substantial economic position to influence the outcome of a potential take-over bid or other matter subject to securityholder approval.

Early Warning Reporting Changes

Plans and Future Intentions

The CSA has signalled concern in the Proposed Amendments with the frequent use of broad and boilerplate “plans or future intentions” disclosure in early warning reports, emphasizing that such generic statements do not relieve a reporting acquiror from updating its disclosure once its intentions become more specific.

Proposed guidance in NP 62-203 would clarify the CSA’s expectations that a reporting acquiror (and any joint actors) should reassess and update its disclosure of plans or future intentions every time a new early warning obligation arises to ensure it remains accurate and meaningful. At the latest, a change in plans or future intentions will occur upon key events such as entering into a definitive agreement, commencing a take‑over bid or publicly announcing a proxy solicitation. However, the change may occur earlier, including where the acquiror or joint actor has taken significant or irreversible steps toward a potential transaction in the absence of a definitive agreement. Disclosure should be updated as soon as a change in plans or future intentions occurs, even if the most recently filed early warning report contains broad and boilerplate reservation of rights language. Significant steps taken by an acquiror or any joint actor with respect to a particular transaction or event may, individually or taken together, constitute a change in plans or future intentions triggering updated disclosure.

Deemed Acquisitions

The Proposed Amendments would expand situations in which a person is deemed to have acquired securities for early warning purposes, even where there has not been a conventional market purchase:

1. New reporting issuers: Currently, a person who beneficially owns, or exercises control or direction over, 10% or more of the securities of an issuer is not required to file an early warning report upon the issuer becoming a reporting issuer. Under the Proposed Amendments, those securities would be deemed to have been acquired at the time the issuer becomes a reporting issuer, triggering an early warning report filing. The typical news release and moratorium requirements of the early warning system would not apply.
   
2. Joint actors: Currently, an early warning report is not required upon the formation of a joint actor relationship among persons who collectively 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 (i.e., the early warning requirements are only triggered when the collective ownership threshold is tripped as a result of a subsequent acquisition). Under the Proposed Amendments, the formation or cessation of a joint actor relationship would trigger deemed acquisition or disposition treatment, without any need for a contemporaneous acquisition or disposition of securities.

In its request for comments, the CSA has asked stakeholders to comment on the appropriateness and potential impact of these proposed deeming provisions, as well as any foreseeable concerns with interpretation and/or enforceability in respect of the joint actor deeming provisions specifically.

Triggers and Thresholds

The CSA has proposed additional targeted amendments to NI 62-103 and NI 62-104 to clarify existing requirements and address potential gaps in the early warning system:

• Subsequent filing triggers: A new defined term “securityholding percentage” would be added to NI 62-104 to clarify that subsequent filings are triggered by a 2% or greater change in ownership relative to the percentage disclosed in the most recently filed early warning report. Amendments to NI 62-103 and NP 62-203 would clarify that for eligible institutional investors filing under the alternative monthly reporting (“AMR”) system, subsequent reports are required upon exceeding fixed 2.5% increments above 10% (e.g., 12.5%, 15%, 17.5%, etc.).
• AMR system entry or re-entry: New provisions would be added to NI 62-103 to permit eligible institutional investors that are not filing reports under the AMR system to enter or re-enter the AMR system by issuing and filing a prescribed news release and subsequently filing the required report.
• Early warning calculations: Proposed guidance in NP 62-203 would provide additional direction on how early warning thresholds should be calculated, including the treatment of convertible securities and limited circumstances in which beneficial ownership may be calculated on a fully diluted basis. The guidance is intended to clarify, for example, how convertible securities that are not exercisable within 60 days are to be included in calculations, including illustrative examples.

These amendments do not necessarily mark substantive changes but rather seek to remedy existing ambiguities in the current rules, which could result in changes to the existing practice of market participants.

Other Changes

Removal of the 5% Market Purchase Exemption

The Proposed Amendments would eliminate the exemption from the take-over bid requirements in subsection 2.2(3) of NI 62-104, which 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. Citing the exemption’s infrequent use and potential to be utilized abusively by bidders to thwart competing bids in a manner that frustrates an open take-over bid process, the CSA is of the view that there is no compelling policy basis to keep the exemption.

Amending and Codifying Common Discretionary Exemptions

The Proposed Amendments include a number of changes aimed to codify forms of discretionary relief commonly granted by the CSA on a case-by-case basis through discretionary exemptive relief applications, which is intended to reduce regulatory burden and cost:

• Non-reporting issuer exemptions: The Proposed Amendments would expand the availability of exemptions from the take-over bid and issuer bid rules for non-reporting issuers. The existing non-reporting issuer exemptions in sections 4.3 and 4.9 of NI 62-104 would be amended to broaden who may be excluded from the 50-securityholder calculation to include additional categories of persons considered by the CSA to be in a similar position to employees and who are viewed as akin to employees in other contexts, such as officers, directors, contractors and consultants.
• Dutch auction issuer bids: New provisions would be added to NI 62-104 to codify relief routinely granted to permit issuers looking to conduct a modified “Dutch auction” issuer bid (generally, where the issuer sets a maximum dollar amount of its own securities that it wishes to repurchase and a range of prices within which securityholders may elect to tender their securities) to extend the bid without first taking up all deposited securities, subject to conditions, and to allow securityholders to tender in a way that preserves their proportionate ownership following completion of the bid.
• Convertible securities: Issuers are currently prohibited from acquiring, or making or entering into an agreement, commitment or understanding to acquire, beneficial ownership of securities of a class subject to an issuer bid, or securities that are convertible into securities of that class, otherwise than under the issuer bid. Under the Proposed Amendments, new provisions would be added to NI 62-104 to permit issuers, in specified cases, to acquire securities convertible into the class subject to the issuer bid.

Settlement Timing

The Proposed Amendments seek to modernize payment timing rules for take-over bids and issuer bids by amending NI 62-104 to replace the current three business day standard with a requirement that payment be made “promptly,” which according to the proposed guidance should be interpreted by reference to the practices of the financial community, including settlement practices in effect at the time.

Next Steps

The Proposed Amendments remain in the consultation stage, with the CSA seeking general feedback and responses to specific questions during the comment period ending August 12, 2026.

The Capital Markets Group at Aird & Berlis LLP will continue to monitor developments related to the Proposed Amendments and changes announced by the CSA. Please contact the authors or a member of the group if you have questions or require assistance.