Block sellers get a new exit lane, and swap-armed activists must finally show their hands
Canadian securities regulators want to overhaul how issuers buy back shares, how investors disclose derivatives, and when early warning reports must land.
The Canadian Securities Administrators on May 14, 2026 opened a 90-day comment period on its Notice and Request for Comment on Proposed Amendments and Changes to the Issuer Bid, Take-Over Bid and Beneficial Ownership Reporting Regimes. The package reaches into three national instruments at once - NI 51-102, NI 62-103, and NI 62-104 - and brushes up against corners of the rulebook that activists, blockholders, and institutional investors deal with routinely.
The headline change is a new Selective Repurchase Exemption. For the first time, an issuer would be able to buy back up to 5 percent of a class of its own securities over a 12-month period through private deals - from not more than five persons and in not more than five transactions. The price has to come in below the closing market price on the issuer's principal exchange at the date of the bid, and a liquid market in the class has to exist. Based on available data, roughly 75 percent of Toronto Stock Exchange issuers and fewer than 10 percent of TSX Venture Exchange issuers would clear that liquidity test. Canadian rules have not permitted bilateral private agreement share repurchases by issuers - this would close the gap with the United States, where selective repurchases are already permitted.
The CSA also took aim at equity equivalent derivatives - the cash-settled total return swaps and contracts for difference that activists have used to build economic positions without crossing early warning thresholds. Regulators are not requiring those positions to be aggregated with beneficial ownership for early warning purposes. But during a take-over bid or a proxy solicitation that requires an information circular to be sent, bidders and soliciting securityholders would have to disclose their aggregate economic position, including any derivative interest that delivers a rate of return between 90 percent and 110 percent of the underlying security. Bidders also face a six-month look-back disclosure in their take-over bid circulars. The CSA cited a 2021 Alberta Securities Commission decision, Re Bison Acquisition Corp, where a bidder's use and disclosure of cash-settled total return swaps in connection with an unsolicited take-over bid was found by the panel to be clearly abusive of both the capital markets and the target's securityholders.
Another wrinkle: the 5% Market Purchase Exemption, which lets bidders buy securities of the target on the open market during a bid, would be scrapped. Regulators flagged just one instance between January 1, 2021 and December 31, 2023 where a bidder issued a news release using it, and concluded it could be deployed tactically to thwart competing bids.
The early warning regime is also getting tightened. Subsequent reports will be triggered by a 2 percent change in an acquiror's securityholding percentage relative to its most recent filing. Eligible institutional investors filing alternative monthly reports will report at fixed 2.5 percent thresholds above 10 percent - 12.5, 15, 17.5, and so on. The CSA also wants to deem a person who already holds 10 percent or more to have "acquired" that stake the moment a private company becomes a reporting issuer, closing what regulators say is a flaw in the current drafting that has let some significant holders skip the initial filing.
The settlement-period language is being modernized too. References to "3 business days" in tendering payment provisions would be replaced with "promptly," reflecting Canada's move to a T+1 settlement cycle on May 27, 2024.
Comments are due August 12, 2026. The full text of the CSA Notice and Request for Comment is available at https://www.osc.ca/en/securities-law/instruments-rules-policies/5/51-102/csa-notice-and-request-comment-proposed-amendments-and-changes-issuer-bid-take-over-bid-and.
