The IIAC submitted comments to the Ontario Securities Commission (OSC) on the proposed changes to the way in which unsolicited or hostile corporate take-over bids are carried out in Canada. The proposed changes to the rules aim to level the playing field between bidders and target boards and to provide additional protection to the existing shareholders of the target company. The IIAC supports the OSC’s objectives, but we have a concern about the extent of time bids must remain open.

In Canada, a company’s board of directors cannot reject a hostile bid without first giving shareholders their say. The proposed rules will substantially extend the period during which a take-over bid must remain open—from the current minimum of 35 days to 120 days. While in some cases the current minimum deposit period is arguably too short to allow target boards to properly evaluate unsolicited bids, to negotiate with a hostile bidder or to seek out competing bids, we believe a longer 120 day bid period may act as a deterrent to bidders in that there are additional costs involved with cash considerations being set aside for a longer period of time. There is also the risk that competing transactions may be identified and accepted by the target company’s board of directors. We believe that a 90-day bid period is sufficient for these boards to properly evaluate bids, and it would not provide a disincentive for potential transactions that may maximize shareholder value.   

Read more in our submission by clicking here.