Photo of Joe BrennanBy Joe BrennanFebruary 29 2016
Business Law

CSA Amends Early Warning System

The Canadian Securities Administrators (CSA) recently announced certain amendments to the “early warning system”.  

The early warning system under Canadian securities laws is designed to inform the marketplace immediately:

  • Whenever a person, either alone or together with “joint actors”, acquires ownership, direction or control over 10% or more of a Canadian reporting issuer’s shares (i.e. a public company’s shares); and
  • Whenever that person, either alone or together with “joint actors”, increases that ownership, direction or control position by a further 2% or more.

The early warning system reporting requirements are satisfied by (i) the immediate issue and filing of a press release and (ii) the filing of a report within two business days, in each case containing prescribed information.  With this information, the investment community can then make assessments about the investor’s intentions with respect to ownership, direction and control of the company.

The amendments recently adopted by the CSA will, among other things:

  1. Timing - Clarify that early warning news releases must be issued and filed no later than the opening of trading on the next business day.
  2. Intentions - Require more detailed information regarding the intentions of the acquiror and the purpose of the acquisition in early warning reports including a requirement to describe any plans or future intentions which the acquiror and any joint actors may have which relate to or would result in any of the following:

    1. the acquisition of additional securities of the reporting issuer, or the disposition of securities of the reporting issuer;
    2. a corporate transaction, such as a merger, reorganization or liquidation, involving the reporting issuer or any of its subsidiaries;
    3. a sale or transfer of a material amount of the assets of the reporting issuer or any of its subsidiaries;
    4. a change in the board of directors or management of the reporting issuer, including any plans or intentions to change the number or term of directors or to fill any existing vacancy on the board; or
    5. solicitation of proxies from security holders;
  3. Decreases – Require disclosure whenever a person previously required to file early warning reports:
    1.  Decreases that person’s ownership, direction or control, either alone or together with “joint actors”, below the 10% reporting threshold; or
    2. Decreases that person’s ownership, direction or control, either alone or together with “joint actors”, by 2% or more.

The amendments will come into force on May 9, 2016.

Invitation for Discussion:

If you would like to discuss the topics raised herein or any other business law matter, please do not hesitate to contact one of the lawyers in the Business Law group at Nerland Lindsey LLP.


Note that the foregoing, and the attached document, are for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.

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