The Canadian Securities Administrators (“CSA”) have proposed the most significant package of amendments to Canada’s take-over bid, issuer bid and beneficial ownership reporting regimes, in years (the “Proposed Amendments”). CSA’s notice and request for comment, published on May 14, 2026, would, among other things, introduce a new issuer bid exemption to allow selective repurchases by an issuer of securities of its own issue, require enhanced derivative disclosure during contested transactions, remove a rarely used market purchase exemption, codify frequently granted exemptive relief, and close several gaps in early warning reporting.

Miller Thomson submitted a comment letter to the CSA on August 12, 2026, supporting the proposed amendments and the CSA’s objectives of increasing flexibility, transparency and regulatory certainty.

What is the new selective repurchase exemption?

The Proposed Amendments would introduce a new exemption under section 4.6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids. The exemption would allow an issuer to repurchase up to 5% of the outstanding securities of a class during a 12-month period through selective, privately negotiated repurchase, provided that the applicable conditions are satisfied.

Key conditions would include the existence of a liquid market for the securities and a repurchase price at a discount to the closing market price. The proposal also includes restrictions concerning the number of sellers and transactions, as well as conditions relating to timing, disclosure, and undisclosed material information. The 5% limit would operate independently of, and be available in addition to, the limits applicable to securities that may be repurchased under other existing issuer bid exemptions.

Why this matters:

Canada’s current regime does not permit bilateral private repurchases. This puts Canadian issuers at a competitive disadvantage to the United States, where selective repurchases are common. Under the existing rules, an issuer seeking to privately repurchase shares from a large holder must apply for individual exemptive relief, a process that adds cost, time, and uncertainty.

The result is that block holders can be left unable to obtain liquidity, creating market overhangs that artificially depress share prices. The new exemption would give boards of directors greater flexibility to allocate capital, provide large holders with a meaningful avenue for liquidity, and bring Canadian practice closer to its U.S. counterpart, while the discount-to-market and liquid-market conditions protect the interests of remaining securityholders.

How would derivative disclosure rules change during bids and proxy solicitations requiring an information circular?

The Proposed Amendments would require enhanced disclosure of a bidder’s or soliciting securityholder’s aggregate economic position in specified circumstances involving a take-over bid or a proxy solicitation for which an information circular is required.

Why this matters:

Under the current framework, a bidder or activist can use equity equivalent derivatives to build significant economic exposure to an issuer without a clear corresponding obligation to disclose that exposure. This can leave the market with an incomplete picture of a bidder’s or soliciting securityholder’s true economic position during a public bid for control.

The CSA has taken a targeted approach: the new economic-exposure disclosure requirements would apply only during the pendency of a take-over bid or a proxy solicitation requiring an information circular, not to routine stake-building or solicitations made under the”quiet solicitation” or “public broadcast” exemptions. This balances enhanced transparency against the CSA’s stated goal of not unduly interfering with legitimate take-over and shareholder activism activity.

Why is the 5% market purchase exemption being removed?

The CSA proposes to remove the exemption in subsection 2.2(3) of NI 62-104. That exemption currently permits a bidder, during the pendency of a take-over bid, to purchase up to 5% of the outstanding securities of the class that is the subject of the bid through the market.

Why this matters:

The CSA has noted that the exemption has seen limited use and that purchases made under it do not count toward the 50% minimum tender condition. The exemption could also be used tactically to reduce the number of securities available to a competing bidder.

What exemptive relief is being codified?

The Proposed Amendments would codify several categories of exemptive relief that the CSA has consistently granted on an individual basis. These include:

  • Employee Adjacent Persons exclusion: The non-reporting issuer exemptions from the take-over bid and issuer bid requirements would be expanded to exclude “Employee Adjacent Persons,” such as officers, directors, contractors, consultants and their spouses, when calculating the Maximum Securityholder Condition.
  • Dutch auction extensions: Issuers would be permitted to extend modified “Dutch auction” issuer bids without first taking up all deposited securities in certain circumstances.
  • Proportionate tender option: Securityholders would be able to maintain their proportionate interest in an issuer following an issuer bid through a codified proportionate tender mechanism.
  • Convertible securities: Issuers would be permitted to repurchase, redeem or otherwise acquire securities convertible into the class subject to an issuer bid in reliance on certain existing exemptions.

Why this matters:

Requiring market participants to apply individually for relief that has been consistently and predictably granted imposes unnecessary cost and delay without any corresponding investor protection benefit. Codifying this relief gives issuers and bidders greater certainty when structuring transactions and allows the CSA to focus its resources on matters that raise novel or public interest concerns.

How are early warning reporting triggers and thresholds changing?

The Proposed Amendments would make several targeted changes to clarify existing requirements and address potential gaps in the early warning reporting triggers and thresholds. The key changes are:

Reporting Issuer threshold crossing: A person who beneficially owns or exercises control or direction over 10% or more of a class prior to, and immediately following an issuer becoming a reporting issuer, would be deemed to have acquired those securities at that time, triggering an early warning report. This closes a gap where significant ownership positions could go unreported following an IPO or other qualifying transaction.

Joint actor formation and cessation: Persons who begin or cease acting jointly or in concert would be deemed to have acquired or disposed of their joint actors’ securities. Under the current rules, the formation or cessation of a joint actor relationship does not trigger a filing, even where the parties collectively hold a position above the reporting threshold.

New “securityholding percentage” concept: The Proposed Amendments introduce a defined term: “securityholding percentage”, to clarify that a subsequent early warning report is required upon a 2% or more change in an acquiror’s post-event ownership relative to its most recently reported position. Eligible institutional investors would be required to file an alternative monthly report upon crossing fixed 2.5% thresholds in excess of 10%.

Re-entry into alternative monthly reporting: Eligible institutional investors that are not currently filing alternative monthly reports would be permitted to enter or re-enter the alternative monthly reporting system, a practical improvement accompanied by additional illustrative guidance in NP 62-203 on how reporting thresholds are calculated.

Why this matters:

The early warning system depends on timely, accurate disclosure of significant ownership positions. These amendments close gaps that have allowed material positions and changes in investment intention to go unreported, particularly in the context of IPOs, joint actor relationships, and the formation of control blocks. Deeming these acquisitions and dispositions appropriately closes gaps that have allowed significant ownership positions and changes in investment intention to go unreported.

The early-warning and alternative monthly reporting amendments would create additional filing triggers and clarify how reporting percentages are calculated, particularly in the context of IPOs, joint-actor relationships, and institutional investors using the AMR system. The CSA’s comment period closed on August 12, 2026. The proposals remain subject to review and potential revision before they are finalized and adopted.

Key takeaways for issuers and investors

  • Selective repurchases will become easier. Issuers will be able to privately repurchase up to 5% of a class without individual exemptive relief. This is a significant practical improvement and a step toward U.S.-style flexibility.
  • Derivative positions will face greater scrutiny during specified transactions. Bidders and activists building economic exposure through equity equivalent derivatives will need to disclose those positions when a take-over bid or contested proxy solicitation is underway.
  • The 5% market purchase exemption is going away. Bidders should plan their acquisition strategies accordingly, since market purchases during a pending bid will no longer be available under this exemption.
  • Routine exemptive relief applications will be eliminated. Categories of frequently granted relief are being codified, reducing transaction costs and timelines for issuers and bidders.
  • Early warning reporting obligations are expanding. The amendments close several gaps, such as reporting issuer threshold crossings, joint actor changes, and the new security holding percentage concept will all trigger reporting obligations that did not previously exist or were unclear.

How Miller Thomson can help

Miller Thomson’s Capital Markets & Securities lawyers advise issuers, investors, boards and advisors on take-over bids, issuer bids, proxy contests, early-warning reporting and related securities law matters. For more information, please contact us.