Takeover Bid Circular (Information) – Securities Regulation

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  1. Takeover Bid Circular (Information)

General Rule: If I what I own + what I buy is over 20, can’t do it without a takeover bid. If you want to own or control 20% or more of the securities of a reporting issuer, you can only do so by takeover bid circular (unless an exemption is available)

  1. Section 94.1(1) and Form 62-504F1: Making a Formal Bid
  • Section 94.1(1): Deliver doc to all securityholders, publish advertisement in a newspaper, then immediately file takeover bid circular with everybody
  • 94.1 (1) Commencement of formal t/o bid: An offeror shall commence a formal take-over bid,

o (a) by publishing an advertisement containing a brief summary of the bid in at least one major daily newspaper of general and regular paid circulation in Ontario; or o (b) by sending the bid to the security holders described in section 94 (all securityholders, all holders of class of securities subject to the bid who are in Ontario)

  • Form 62-504F1: The Circular: Must contain information set out in Form 62-504F1 ^ tells you what has to go in t/o bid circular, mandates information like a prospectus: objective is to give people sufficient information to make an informed decision

o Information in takeover bid circular includes: name of offeror and issuer; ownership and trading by offeror; method/time of pmt for shares; source of funds to be used for pmt; whether offeror intends to purchase shares subject to the bid in the mkt; info indicating a material change in the offeree issuer since last interim/ annual financial statements; material facts rel to offeree issuer; appropriate prospectus info if offer is a share exchange offer

  1. Legislative goal met

*Protect SHs by providing Information and Time

  1. Information
  • Provides information to assist the offeree SH in deciding whether of offer share or hold shares in hopes of (i) sharing in gain accruing post-takeover or (ii) getting a subsequent competing offer.
  • Takeover Bid Circular provides information similar to a prospectus and provides information relating to the bid.
  • Time: Allows them time to review what’s in the circular

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