Expanded Early Warning Reporting Proposed By Canadian Securities Regulators

In a move that could limit the options of potential acquirors and activist investors, while significantly increasing the paper burden for institutional investors and mutual funds, the Canadian Securities Administrators have proposed a significant expansion to the early warning obligations for investors in securities of Canadian public issuers. The regulators aim to provide greater transparency and address concerns regarding hidden ownership and empty voting.

The key changes proposed include:

• Decreasing the threshold for reporting from 10% to 5% of the outstanding securities of a class.
• Equity derivative positions that are substantially equivalent to ownership and securities lending arrangements will be included in determining the securities owned or controlled.