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May 2, 2016
Amendments changing the early warning reporting system take effect on May 9, 2016, provided all necessary approvals are obtained (except in Ontario, where some of the changes will take effect on the later of May 9 and the day on which certain sections of Schedules 18 of the Budget Measures Act, 2015 (Ontario) are proclaimed in force). Announced by the Canadian Securities Administrators (CSA) on February 25, 2016, the final changes are not as expansive as those earlier proposed and seem to strike a fair balance between increasing transparency and unduly burdening investors and issuers with cumbersome reporting requirements. The amendments also clarify several previously unclear aspects of the early warning reporting system.
No Threshold Change. Notably, the CSA did not implement the reduction to the early warning threshold from 10% to 5% as originally proposed. Institutional investors that commented that a lower reporting threshold would reduce access to capital for smaller issuers and hinder investors’ ability to rapidly accumulate or reduce large ownership positions in the normal course of their investment activities welcomed the CSA’s decision.
5 Key Changes. The amendments make incremental changes designed to provide greater transparency about holdings of reporting issuers’ securities by enhancing the quality and integrity of the early warning reporting regime. Here’s a summary of the five key final changes:
Clarification. The amendments also clarify several previously vague aspects of the early warning reporting system, making them clearer and lending greater certainty to the navigation of the early warning reporting rules:
Concurrent Amendments. The CSA adopted the amendments to the early warning system concurrently with amendments to the regime governing the conduct of take-over bids, and involve amendments to these instruments and policies:
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