Unsolicited takeover bid times to be lengthened

Unsolicited takeover bids for Canadian companies must seek at least 50 per cent of a target company’s stock and remain open for at least 105 days, according to new rules that will take effect in May.

Canadian Securities Administrators, the umbrella group t hat co- ordinates policy among Canada’s 13 provincial and territorial securities regulators, published the new rules Thursday. The policy completes a three- year process in which Canadian regulators have sought to overhaul the rules on hostile takeover bids.

“The new regime will enhance the ability of the security holders to make voluntary, informed and coordinated tender decisions while providing boards with additional time and discretion when responding to a takeover bid,” said Louis Morisset, chair of the CSA.

As reported in the Financial Post on Monday, the new rules require bids to remain open for 105 days, up from the current rule of at least 35 days. In an earlier draft policy, the CSA had proposed extending the minimum bid period to 120 days.

Unchanged from the original proposal, bids must require acceptance by at least 50 per cent of a target company’s outstanding shares. The current rules do not require unsolicited bids to come with a minimum tender requirement.

Bids that meet conditions set by the bidder, plus the minimum 50-per-cent, takeup requirement set by the new rules, must be automatically extended for 10 days so holdout investors can tender.