CSA proposes amendments to the issuer bid, take-over bid, and early warning reporting regimes

On May 14, 2026, the Canadian Securities Administrators (CSA) issued a Notice and Request for Comment proposing wide-ranging amendments to the issuer bid, take-over bid, and early warning reporting regimes, including the introduction of a new issuer bid exemption for selective repurchases.

The proposed amendments form part of the CSA’s broader efforts to strengthen the competitiveness of Canada’s capital markets and are intended to provide issuers with greater flexibility to repurchase their own securities, enhance transparency regarding ownership of derivative interests in specified circumstances, clarify existing requirements, and reduce regulatory burden. The comment period expires on August 12, 2026.

What you need to know

• The CSA has proposed a new exemption that would allow issuers to repurchase, at a discount to the closing price, up to 5% of the outstanding securities of a class in a 12-month period through selective, privately negotiated transactions, subject to certain limitations. The exemption represents a departure from the current Canadian issuer bid regime, which does not permit selective repurchases by issuers.
• New disclosure requirements would apply to bidders and soliciting securityholders regarding their interests in equity equivalent derivatives and other arrangements that alter economic exposure to an issuer’s voting or equity securities, but only in the context of formal take-over bids and proxy solicitations where an information circular is required.
• The proposed amendments address several gaps and ambiguities in the early warning system, including deemed acquisitions upon an issuer becoming a reporting issuer, deemed acquisitions and dispositions upon the formation or cessation of joint actor relationships, and clarification of the triggers for subsequent filings.
• The proposed amendments would remove the exemption permitting bidders to make market purchases of up to 5% of the outstanding securities of a class subject to a take-over bid during the pendency of the bid.
• Several amendments would codify exemptive relief that the CSA has previously granted on a case-by-case basis, including relief related to Dutch auction issuer bids, proportionate tenders, and non-reporting issuer exemptions.

The proposed selective repurchase exemption

Under the Canadian issuer bid regime, an issuer seeking to acquire or redeem its own securities from one or more securityholders must comply with the formal issuer bid requirements set out in National Instrument 62-104 –Take-Over Bids and Issuer Bids (NI 62-104), unless an exemption is available. Although NI 62-104 includes a “private agreement” exemption from the take-over bid requirements (i.e., permitting an offeror to purchase securities from a limited number of sellers, subject to certain conditions), there is currently no analogous exemption from the issuer bid requirements. As a result, issuers that wish to undertake privately negotiated, selective repurchases from particular securityholders must generally obtain exemptive relief from securities regulatory authorities.

Stakeholders have previously observed that the Canadian issuer bid framework may be overly restrictive in this area, particularly given that selective repurchases are permitted in the United States. The inability of significant shareholders to have larger blocks of their holdings selectively repurchased by the issuer may lead instead to sales in the public market, resulting in an overhang that artificially depresses the market price of the securities. In addition, significant shareholders resident in Canada can be disadvantaged relative to their peers in other jurisdictions, who may be able to participate in selective repurchases by an issuer—particularly where the issuer is not a reporting issuer in Canada.

To address these concerns, the CSA has proposed a new issuer bid exemption to permit selective repurchases of an issuer’s securities, subject to the following conditions:

• Repurchase limit: The issuer may acquire no more than 5% of the outstanding securities of a class within a 12-month period in reliance on the exemption.
• Purchaser and transaction limits: The issuer may acquire securities in reliance on the exemption from no more than five persons in the aggregate and through no more than five transactions in the aggregate within any 12-month period. All five transactions may be completed with a single securityholder.
• Pricing restriction: The consideration, including brokerage fees or commissions, must be less than the closing price of the class of securities on the market on which the class is principally traded on the date of the bid.
• Liquid market: A liquid market in the class of securities must exist on the date of the bid. The liquid market criteria include, among other things, minimum thresholds relating to the number of freely tradeable outstanding securities, aggregate trading volume, number and value of trades, and the market value of the class of securities. The CSA has indicated it expects that approximately 75% of issuers listed on the Toronto Stock Exchange would satisfy the liquid market criteria.
• Board determination: The issuer’s board of directors must determine that, following completion of the bid, the market for the class of securities would not reasonably be expected to be materially less liquid than the market that existed at the date of the bid, and that the bid would not reasonably be expected to have a significant negative effect on the market price or value of the securities.
• No undisclosed material information: Neither the issuer, nor—to the issuer’s knowledge after reasonable inquiry—the selling securityholder may have knowledge of any material fact or material change in respect of the issuer or its securities that has not been generally disclosed at the date of the bid.
• Timing: The bid must be made outside regular trading hours of the principal market for the class of securities.
• Disclosure requirements: Following the making of the bid and prior to the opening of trading, the issuer must issue and file a news release disclosing the name of the selling securityholder, the number of securities acquired, the consideration paid, the market price at the date of the bid, and the aggregate number of securities acquired in the preceding 12 months in reliance on the exemption.

The CSA has also proposed new guidance in National Policy 62-203 –Take-Over Bids and Issuer Bids (NP 62-203) regarding selective offshore repurchases, clarifying that while offers made to securityholders who are not in Canada or residents of Canada technically fall beyond the definition of an “issuer bid”, the CSA retains public interest jurisdiction over such transactions. In general, offshore repurchases would not raise public interest concerns if the issuer conducts the repurchase in the circumstances and manner described in the proposed selective repurchase exemption.

Enhanced equity equivalent derivative disclosure

The CSA has proposed amendments to NI 62-104, National Instrument 51-102 – Continuous Disclosure Obligations and related forms to introduce new disclosure requirements relating to equity equivalent derivatives and other arrangements that alter economic exposure to an issuer. The proposed requirements would apply in the context of take-over bids and proxy solicitations for which an information circular is required.

For bidders, the amendments would require (i) prescribed disclosure in a take-over bid circular of any interests in equity equivalent derivatives and other similar arrangements held during the six-month period preceding the bid, (ii) news release disclosure of changes in economic exposure during the pendency of a bid, and (iii) disclosure of past or present relationships with counterparties that could be perceived to affect the counterparty’s decisions regarding the issuer’s securities. For soliciting securityholders, the amendments would deem an acquiror who is a counterparty to an equity equivalent derivative to have acquired control or direction over the underlying reference securities during the pendency of a proxy solicitation campaign (thereby requiring early warning-style disclosure of changes in their aggregate economic position), and would require comparable disclosure of derivative interests, economic exposure, and past or present counterparty relationships in dissident proxy circulars.

The CSA has also proposed guidance on when the disclosure or use of equity equivalent derivatives may engage securities regulatory authorities’ public interest jurisdiction.

Amendments to the early warning system

A new provision in NI 62-104 would deem securities held by a person at the time an issuer becomes a reporting issuer to have been acquired at that time, clarifying that holders of 10% or more of a class of securities must file an early warning report upon the issuer’s transition to reporting issuer status. New provisions would also deem each person acting jointly or in concert with other securityholders to have acquired (or, upon cessation of the joint actor relationship, disposed of) the securities held by the other joint actors. Under the current regime, no early warning report is required upon the formation of a joint actor relationship among securityholders who collectively hold 10% or more of a class of securities, but who individually hold less than 10%, absent the acquisition or disposition of securities.

The proposed amendments would also clarify the trigger for subsequent filings under both the early warning system and the alternative monthly reporting (AMR) system in various contexts, including following an issuer action and during a non-exempt take-over bid or issuer bid.

In addition, the CSA has proposed guidance in NP 62-203 regarding disclosure of plans or future intentions in early warning reports. The guidance would clarify that a significant shareholder subject to the reporting requirements (i) should re-assess the accuracy of its disclosure in respect of plans or future intentions every time the requirement to file an early warning report is triggered, (ii) should update its disclosure as soon as a change in plans or future intentions occurs or if it or any joint actor has taken irrevocable steps to effect a potential transaction, and (iii) that significant steps by a significant shareholder or joint actor may, individually or taken together, constitute a change in the plans or future intentions disclosed in the most recent early warning report.

Amendments to exemptions and other changes

The proposed amendments include several additional changes to the take-over bid and issuer bid regimes: 

• Removal of the 5% market purchase exemption. The proposed amendments would eliminate the exemption in NI 62-104 that permits bidders, during the pendency of a take-over bid, to acquire up to 5% of the outstanding securities of the subject class through market purchases. The CSA cited the potential for tactical use of the exemption to impede competing bids as well as its infrequent use as the rationale for this change.
• Codification of common exemptive relief. Several amendments would codify exemptive relief that the CSA has previously granted on a case-by-case basis, including:
  • expanding the non-reporting issuer exemptions from the take-over bid and issuer bid requirements to codify additional categories of persons that may be excluded for purposes of calculating the maximum securityholder condition;  
  • allowing issuers to extend modified Dutch auction issuer bids without first taking up all securities deposited;
  • facilitating proportionate tenders, where securityholders can elect to sell the number of securities required to maintain their proportionate interest following completion of a bid; and
  • permitting issuers to repurchase, redeem, or otherwise acquire securities that are convertible into the class subject to an issuer bid, in addition to securities of the class itself, during the pendency of the bid.
• New guidance. The CSA has also proposed guidance in NP 62-203 on several additional topics, including:
  • bid conditions that may engage securities regulatory authorities’ public interest jurisdiction;
  • mini-tender offers and the circumstances in which securities regulators may intervene;
  • how the “date of the bid” is to be determined for purposes of certain exemptions from the take-over bid and issuer bid requirements (which is relevant, for example, where put or call options are involved); and
  • that the concept of acting jointly or in concert applies to proxy solicitations for the purpose of voting on an alternative slate of directors, even in the absence of a take-over bid or issuer bid.

Next steps

The CSA is accepting comments on the proposed amendments until August 12, 2026. The authors are available to discuss any aspect of the proposed amendments or assist readers in preparing comments for submission to the CSA.