Securities Law

62-502 - Takeover Bids and Issuer Bids [BCI Advance Notice - Lapsed]

Published Date: 2004-10-13
Rescinded Date: 2006-05-31
Definitions

1 In this instrument:

“Act” means the Securities Act, S.B.C. 2004, c. 43;

“control person” means

(a) a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, or

(b) each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer,

and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer;
“designated” means designated by the commission;

“equity security” means any security of an issuer that carries a residual right to participate in the earnings of the issuer and, on the liquidation or winding up of the issuer, in its assets;

“formal bid” means

(a) a takeover bid or an issuer bid to which section 14 applies, or

(b) a takeover bid that is exempted from sections 14 to 21 or an issuer bid that is exempted from sections 14 to 17, 19 and 21

(i) by reason of an exemption under section 38(f), if the offeror is required to deliver to every holder in British Columbia of securities subject to the bid a disclosure document, or

(ii) by reason of an exemption under section 37(1)(d) or 38(i), if the offeror is required to deliver disclosure material relating to the bid to holders of the class of securities subject to the bid;

“holder in British Columbia” means, in respect of a security of an issuer, a holder of the security of the issuer whose last address as shown on the books of the issuer is in British Columbia;

“issuer bid” means an offer to acquire or redeem securities of an issuer made by the issuer to any person who is in British Columbia or to any holder in British Columbia of securities of the issuer and includes a purchase, redemption or other acquisition of securities of the issuer by the issuer from any such person, but does not include an offer to acquire or redeem debt securities that are not convertible into securities other than debt securities;

“offer to acquire” includes

(a) an offer to purchase, or a solicitation of an offer to sell, securities, or

(b) an acceptance of an offer to sell securities, whether or not such offer to sell has been solicited,

or any combination thereof, and the person accepting an offer to sell is deemed to be making an offer to acquire to the person that made the offer to sell;
“offeree issuer” means an issuer whose securities are the subject of a takeover bid, an issuer bid or an offer to acquire;

“offeror” means a person who makes a takeover bid, issuer bid or offer to acquire;

“offeror's securities” means securities of an offeree issuer beneficially owned, or over which control or direction is exercised, on the date of an offer to acquire, by an offeror or any person acting jointly or in concert with the offeror;

“published market” means, as to any class of securities, a marketplace on which the securities are traded, if the prices at which they have traded on that marketplace are regularly

(a) disseminated electronically, or

(b) published in a newspaper or business or financial publication of general and regular paid circulation;

“rules” means the Securities Rules;

“takeover bid” means an offer to acquire outstanding voting or equity securities of a class made to any person who is in British Columbia or to any holder in British Columbia of securities subject to the offer to acquire, if the securities subject to the offer to acquire, together with the offeror's securities, constitute in aggregate 20% or more of the outstanding securities of that class of securities at the date of the offer to acquire.

Computation of time and expiry of bid

2 In this instrument,

(a) a period of days is to be computed as

(i) beginning on the day next following the event that began the period, and

(ii) ending at midnight on the last day of the period,

except that if the last day of the period does not fall on a business day, the period ends at midnight on the next business day, and
(b) a takeover bid or an issuer bid expires at the later of

(i) the end of the period, including any extension, during which securities may be deposited pursuant to the bid, and

(ii) the time at which the offeror becomes obligated by the terms of the bid to take up or reject securities deposited under the bid.

Convertible securities

3 In this instrument,

(a) a security is deemed to be convertible into a security of another class

(i) if, whether or not on conditions, it is or may be convertible into or exchangeable for a security of the other class, whether of the same or another issuer, or

(ii) if it carries the right or obligation to acquire a security of the other class, whether of the same or another issuer, and

(b) a security that is convertible into a security of another class is deemed to be convertible into a security or securities of each class into which the second mentioned security may be converted, either directly or through securities of one or more other classes of securities that are themselves convertible.

Deemed beneficial ownership

4 (1) In this instrument, in determining the beneficial ownership of securities of an offeror or of any person acting jointly or in concert with the offeror, at any given date, the offeror or the person is deemed to have acquired and be the beneficial owner of a security, including an unissued security, if the offeror or the person

(a) is the beneficial owner of any security convertible within 60 days following such date into the security, or

(b) has the right or obligation, whether or not on conditions, to acquire within 60 days following such date beneficial ownership of the security, whether through the exercise of an option, warrant, right or subscription privilege or otherwise.

(2) If 2 or more offerors acting jointly or in concert make one or more offers to acquire securities of a class, the securities subject to any such offer or offers to acquire are deemed to be securities subject to the offer to acquire of each such offeror for the purpose of determining whether any such offeror is making a takeover bid.

(3) If an offeror or any person acting jointly or in concert with the offeror is deemed by subsection (1) to be the beneficial owner of unissued securities, the securities are deemed to be outstanding for the purpose of calculating the number of outstanding securities of that class in respect of that offeror's offer to acquire.

Acting jointly or in concert

5 (1) In this instrument, it is a question of fact as to whether a person is acting jointly or in concert with an offeror and, without limiting the generality of this, the following are presumed to be acting jointly or in concert with an offeror:

(a) every person who, as a result of any agreement, commitment or understanding, whether formal or informal, with the offeror or with any other person acting jointly or in concert with the offeror, acquires or offers to acquire securities of the issuer of the same class as those subject to the offer to acquire;

(b) every person who, as a result of any agreement, commitment or understanding, whether formal or informal, with the offeror or with any other person acting jointly or in concert with the offeror, intends to exercise jointly or in concert with the offeror or with any other person acting jointly or in concert with the offeror any voting rights attaching to any securities of the offeree issuer;

(c) every associate or affiliate of the offeror.

(2) Despite subsection (1), a registered dealer acting solely in an agency capacity for the offeror in connection with a takeover bid or an issuer bid and not executing principal transactions for the registered dealer's own account in the class of securities subject to the offer to acquire or performing services beyond customary dealer's functions is not to be presumed solely by reason of such agency relationship to be acting jointly or in concert with the offeror in connection with the bid.

Application to direct and indirect offers

6 In this instrument, a reference to an offer to acquire or to the acquisition or ownership of securities or to control or direction over securities is to be construed to include a direct or indirect offer to acquire or the direct or indirect acquisition or ownership of securities, or the direct or indirect control or direction over securities, as the case may be.


Division 2 - Bids

Sub-Division I - Restrictions on Acquisitions or Sales


Definition of “offeror”

7 In sections 8 to 12, “offeror” means

(a) an offeror making a formal bid other than a bid referred to in section 37(1)(d) or 38(i),

(b) a person acting jointly or in concert with an offeror referred to in paragraph (a), or

(c) a control person of an offeror referred to in paragraph (a) or an associate or affiliate of such control person.

Restrictions on acquisitions during takeover bid

8 (1) An offeror must not offer to acquire or make, or enter into, an agreement, commitment or understanding to acquire beneficial ownership of any securities of the class that are subject to a takeover bid otherwise than pursuant to the bid on and from the day of the announcement of the offeror's intention to make the bid until its expiry.

(2) Despite subsection (1), an offeror making a takeover bid may purchase, through the facilities of an exchange, securities of the class that are subject to the bid and securities convertible into securities of that class beginning on the third business day following the date of the bid until the expiry of the bid if

(a) the intention to make such purchases is stated in the takeover bid circular,

(b) the aggregate number of securities acquired under this subsection does not constitute in excess of 5% of the outstanding securities of that class as at the date of the bid, and

(c) the offeror issues and files a press release immediately after the close of business of the exchange on each day on which securities have been purchased under this subsection disclosing the information required in this instrument.

(3)Despite subsection (2), an offeror may not make purchases allowed under that subsection unless

(a) the purchases are made in the normal course on an exchange;

(b) any broker acting for the offeror does not, in regard to the purchases, perform services beyond the customary broker’s functions and does not receive more than the usual fees or commissions charged for comparable services performed by the broker in the normal course;

(c) neither the offeror nor any person or company acting for the offeror solicits or arranges for the solicitation of offers to sell securities of the class subject to the bid, except for the solicitation by the offeror or members of the soliciting dealer group under the take-over bid; and

(d) the seller or any person or company acting for the seller does not, to the knowledge of the offeror, solicit or arrange for the solicitation of offers to buy securities of the class subject to the bid.

(4) Subsection (1) does not apply to an offeror in respect of an agreement between a securityholder and the offeror to the effect that the securityholder, in accordance with the terms and conditions of a takeover bid that is a formal bid made by the offeror, will deposit the securityholder's securities pursuant to the bid.

Information required in press release

9 A press release required under section 8(2)(c) must disclose, in respect of the class of securities subject to the takeover bid and of each class of securities convertible into securities of that class purchased through the facilities of the stock exchange,

(a) the name of the purchaser,

(b) if the purchaser is a person referred to in section 7(1)(b) or (c), the relationship of the purchaser and the offeror,

(c) the number of securities purchased by the purchaser on the day for which the press release is required,

(d) the highest price paid for the securities by the purchaser on the day for which the press release is required,

(e) the aggregate number of securities purchased through the facilities of the stock exchange by the purchaser during the currency of the bid,

(f) the average price paid for the securities that were purchased by the purchaser through the facilities of the stock exchange during the currency of the bid, and

(g) the total number of securities owned by the purchaser as of the close of business of the stock exchange on the day for which the press release is required.

Restrictions on acquisitions during issuer bid

10 An offeror making an issuer bid must not offer to acquire, or make or enter into any agreement, commitment or understanding to acquire, beneficial ownership of any securities of the class that are subject to the bid otherwise than pursuant to the bid on and from the day of the announcement of the offeror's intention to make the bid until the bid's expiry, but this section does not apply so as to prevent the offeror from purchasing, redeeming or otherwise acquiring any such securities during such period in reliance on an exemption under section 38 (a), (b) or (c).

Restrictions on pre-bid and post-bid acquisitions

11 (1) If a takeover bid that is a formal bid is made by an offeror and, within the period of 90 days immediately preceding the bid, the offeror acquired beneficial ownership of securities of the class subject to the bid pursuant to a transaction not generally available on identical terms to holders of that class of securities,

(a) the offeror must offer

(i) consideration for securities deposited under the bid at least equal to and in the same form as the highest consideration that was paid on a per security basis under any of such prior transactions, or

(ii) at least the cash equivalent of such consideration, and

(b) the offeror must offer to acquire under the bid that percentage of securities of the class subject to the bid that is at least equal to the highest percentage that the number of securities acquired from a seller in such a prior transaction was of the total number of securities of that class beneficially owned by such seller at the time of the prior transaction.

(2) During the period beginning with the expiry of a takeover bid that is a formal bid and ending at the end of the 20th business day after that, whether or not any securities are taken up under the bid, an offeror must not acquire beneficial ownership of securities of the class that was subject to the bid except by way of a transaction that is generally available to holders of that class of securities on terms identical to those under the bid.

(3) Subsections (1) and (2) do not apply to trades effected in the normal course on a published market, so long as

(a) any broker acting for the purchaser or seller does not perform services beyond the customary broker's function and does not receive more than reasonable fees or commissions,

(b) the purchaser or any person acting for the purchaser does not solicit or arrange for the solicitation of offers to sell securities of the class subject to the bid, and

(c) the seller or any person acting for the seller does not solicit or arrange for the solicitation of offers to buy securities of the class subject to the bid.

(4) Subsection (1) does not apply to an offeror under a takeover bid if the transaction that occurred within 90 days immediately preceding the bid was

(a) a trade in a security of the issuer that had not been previously issued, or

(b) a trade by or on behalf of the issuer in a previously issued security of that issuer that had been redeemed or purchased by or donated to that issuer.

Sales during bid prohibited

12 (1) Except pursuant to the bid, an offeror must not sell or make or enter into any agreement, commitment or understanding to sell any securities of the class subject to the bid on and from the day of the announcement of the offeror's intention to make the bid until its expiry.

(2) Despite subsection (1), an offeror may, before the expiry of a bid, make or enter into an arrangement, commitment or understanding to sell securities that may be taken up by the offeror pursuant to the bid, after the expiry of the bid, if the intention to sell is disclosed in the takeover bid circular or issuer bid circular, as the case may be.

(3) Subsection (1) does not apply to an offeror under an issuer bid in respect of the issue by it of securities pursuant to a dividend plan, dividend reinvestment plan, purchase plan or another similar plan.

Exemption

13 Sections 8 to 12 do not apply to an associate of a control person referred to in section 7(1)(c) that is not acting jointly or in concert with the control person in respect of the formal bid referred to in section 7(1)(a).


Sub-Division II - Requirements for bids

General provisions

14 The following requirements apply to every takeover bid and issuer bid:

(a) Delivery of bid. — The bid must be made to all holders of securities of the class that is subject to the bid who are in British Columbia, and delivered by the offeror to all holders in British Columbia of securities of that class and of securities that, before the expiry of the bid, are convertible into securities of that class;

(b) Minimum deposit period. — The offeror must allow securities to be deposited pursuant to the bid for at least 35 days from the date of the bid;

(c) When taking up prohibited. — Securities deposited pursuant to the bid must not be taken up by the offeror until the expiration of 35 days from the date of the bid;

(d) Withdrawal. - Securities deposited pursuant to the bid may be withdrawn by or on behalf of a depositing securityholder

(i) at any time before the securities have been taken up by the offeror,

(ii) at any time before the expiration of 10 days from the date of a notice of change or variation under section 17, and

(iii) if the securities have not been paid for by the offeror within 3 business days after having been taken up;

(e) Exception. — The right of withdrawal conferred by paragraph (d) (ii) does not apply

(i) if the securities have been taken up by the offeror at the date of the notice,

(ii) if a variation in the terms of a bid consists solely of an increase in the consideration offered for the securities subject to the bid and the time for deposit is not extended for a period greater than that required by section 17(5), or

(iii) in the circumstances described in section 17(6);

(f) Notice of withdrawal. — Notice of withdrawal of any securities under paragraph (d) must be made by or on behalf of the depositing securityholder by a method that provides the depository designated under the bid with a written or printed copy and, to be effective, the notice must be actually received by the depository and, if notice is given in accordance with this paragraph, the offeror must return the securities to the depositing securityholder;

(g) Pro rata take up. — If the bid is made for less than all of the class of securities subject to the bid and if a greater number of securities is deposited pursuant to the bid than the offeror is bound or willing to acquire under the bid, the securities must be taken up and paid for by the offeror, as nearly as may be pro rata, disregarding fractions, according to the number of securities deposited by each depositing securityholder;

(h) Effect of market purchases. — If an offeror purchases securities as permitted by section 8(2), the securities so purchased must be counted in the determination of whether a condition as to the minimum number of securities to be deposited in the bid has been fulfilled, but must not reduce the number of securities the offeror is bound under the bid to take up;

(i) When securities must be taken up and paid for. — Subject to paragraphs (j) and (k), the offeror must take up and pay for securities deposited under the bid, if all the terms and conditions of the bid have been complied with or waived, not later than 10 days after the expiry of the bid;

(j) Further regarding when securities must be taken up and paid for. — Any securities that are taken up by the offeror under the bid must be paid for by the offeror as soon as possible, and in any event not later than 3 business days, after the taking up of the securities;

(k) Further regarding when securities must be taken up and paid for. — Any securities deposited pursuant to the bid subsequent to the date on which the offeror first takes up securities deposited under the bid must be taken up and paid for by the offeror not later than 10 days after the deposit of the securities;

(l) Extension restricted. — A bid may not be extended by the offeror, if all the terms and conditions of the bid have been complied with except those waived by the offeror, unless the offeror first takes up all securities deposited under the bid and not withdrawn;

(m) Further regarding bid extensions. — Despite paragraph (l), if the offeror waives any terms or conditions of a bid and extends the bid in circumstances where the rights of withdrawal conferred by paragraph (d) (ii) are applicable, the bid must be extended without the offeror first taking up the securities which are subject to those rights of withdrawal;

(n) Press release. — If all the terms and conditions of the bid have been complied with or waived, the offeror must immediately issue a notice by press release to that effect, which press release must disclose the approximate number of securities deposited and the approximate number that will be taken up.

Financing of bid

15 If a takeover bid or issuer bid provides that the consideration for the securities deposited pursuant to the bid is to be paid in cash or partly in cash, the offeror must make adequate arrangements before the bid to ensure that the required funds are available to make full payment for all securities that the offeror has offered to acquire.

Consideration in bids

16 (1) If a takeover bid or issuer bid is made, all holders of the same class of securities must be offered identical consideration.

(2) If a person makes or intends to make a takeover bid or issuer bid, the person or any person acting jointly or in concert with that person, must not enter into any collateral agreement, arrangement, commitment or understanding for the purpose, in whole or in part, of providing a holder or beneficial owner of securities of the offeree issuer with an incentive, not offered to the other holders of securities of the same class, to accept the bid.

. (3) If a variation in the terms of the takeover bid or issuer bid before the expiry of the bid increases the value of the consideration offered for the securities subject to the bid, the offeror must pay that increased consideration to each person whose securities are taken up pursuant to the bid, whether or not the securities were taken up by the offeror before the variation.


Sub-Division III - Bid Circulars

Offeror’s circular

17 (1) An offeror must deliver, with or as part of a takeover bid or issuer bid, a takeover bid circular or issuer bid circular, as the case may be.

(2) If, before the expiry of a takeover bid or issuer bid or after the expiry of the bid but before the expiry of all rights to withdraw the relevant securities, a change has occurred in the information contained in a takeover bid circular or issuer bid circular or in any notice of change or notice of variation that would reasonably be expected to affect the decision of the holders of the securities of the offeree issuer to accept or reject the bid, a notice of the change must be delivered to every person to whom the circular was required to be delivered and whose securities were not taken up at the date of the occurrence of the change.

(3) Subsection (2) does not apply to a change that is not within the control of the offeror or of an affiliate of the offeror unless it is a change in material information relating to the securities being offered in exchange for securities of the offeree issuer.

(4) If there is a variation in the terms of a takeover bid or issuer bid, including any extension of the period during which securities may be deposited under the bid, and whether or not the variation results from the exercise of any right contained in the bid, a notice of the variation must be delivered to every person to whom the takeover bid circular or issuer bid circular was required to be delivered and whose securities were not taken up at the date of the variation.

(5) Subject to subsection (6), if there is a variation in the terms of a takeover bid or issuer bid, the period during which securities may be deposited pursuant to the bid must not expire before 10 days after the notice of variation has been delivered.

(6) Subsection (5) does not apply to a variation in the terms of a bid consisting solely of the waiver of a condition in the bid where the consideration offered for the securities that are subject to the bid consists solely of cash.

(7) A takeover bid circular and an issuer bid circular must be in the required form.

(8) A notice of change and a notice of variation must contain the information required by this instrument.

Content of notice of change or notice of variation

18 (1) A notice of change required under section 17(2) must contain

(a) a description of the change in the information contained in

(i) the takeover bid circular,

(ii) the issuer bid circular,

(iii) any notice of change previously delivered under section 17(2), or

(iv) any notice of variation previously delivered under section 17(4),

(b) the date of the change,

(c) the date up to which securities may be deposited,

(d) the date by which securities deposited must be taken up by the offeror, and

(e) a description of the rights of withdrawal that are available to securityholders.

(2) A notice of variation required under section 17(4) must contain

(a) a description of the variation in the terms of the takeover bid or issuer bid,

(b) the date of the variation,

(c) the date up to which securities may be deposited,

(d) the date by which securities deposited must be taken up by the offeror, and

(e) a description of the rights of withdrawal that are available to securityholders.

Restriction on variations in terms of bids

19 (1) A variation in the terms of a takeover bid or issuer bid, other than a variation that is the waiver by the offeror of a condition that is specifically stated in the bid as being waivable at the sole option of the offeror, must not be made after the expiry of the period, including any extension of the period, during which securities may be deposited pursuant to the bid.

(2) If there is a variation in the terms of a takeover bid or issuer bid that is the waiver by the offeror of a condition that is specifically stated in the bid as being waivable at the sole option of the offeror, section 17(4) does not apply in respect of that bid if

(a) the waiver occurs, and the offeror has issued a press release announcing the waiver, during the 5 days immediately following the expiry of the period, including any extension of the period, during which securities may be deposited pursuant to the bid, and

(b) the consideration offered for the securities consists solely of cash.

Directors' circular

20 (1) If a takeover bid has been made, a directors' circular must be prepared and delivered by the board of directors of an offeree issuer to every person to whom a takeover bid must be delivered under section 14(a), not later than 15 days after the date of the bid.

(2) The board of directors must include in a directors' circular either

(a) a recommendation to accept or to reject a takeover bid and the reasons for their recommendation, or

(b) a statement that they are unable to make or are not making a recommendation and, if no recommendation is made, the reasons for not making a recommendation.

(3) An individual director or officer may recommend acceptance or rejection of a takeover bid if the director or officer delivers with the recommendation a circular prepared in accordance with this instrument and in the required form.

(4) If a board of directors is considering recommending acceptance or rejection of a takeover bid, it

(a) must, at the time of sending or delivering a directors' circular, advise the securityholders of this fact, and

(b) may advise them not to tender their securities until further communication is received from the directors.

(5) If subsection (4) applies, the board of directors must deliver the recommendation or the decision not to make a recommendation at least 7 days before the scheduled expiry of the period during which securities may be deposited under the bid.

(6) If, before the expiry of a takeover bid or after the expiry of the bid but before the expiry of all rights to withdraw the securities that have been deposited under the bid,

(a) a change has occurred in the information contained in a directors' circular or in any notice of change to a directors' circular that would reasonably be expected to affect the decision of the holders of the securities to accept or reject the bid, the board of directors of the offeree issuer must immediately deliver a notice of the change to every person to whom the circular was required to be sent disclosing the nature and substance of the change, or

(b) a change has occurred in the information contained in an individual director's or officer's circular or any notice of change to it that would reasonably be expected to affect the decision of the holders of the securities to accept or reject the bid, other than a change that is not within the control of the individual director or officer, as the case may be, that individual director or officer must immediately deliver a notice of change in relation to it to the board of directors.

(7) If an individual director or officer submits a circular under subsection (3) or a notice of change under subsection (6)(b) to the board of directors, the board, at the offeree issuer's expense, must deliver a copy of the circular or notice to the persons referred to in subsection (1).

(8) A directors' circular and a director's or officer's circular must be in the required form.

(9) A notice of change required under subsection (6)(a) or (b) must contain a description of the change in the information contained in

(a) the directors' circular,

(b) any notice of change previously delivered under subsection (6)(a),

(c) the director's or officer's circular, or

(d) any notice of change previously delivered under subsection (6)(b).

Commencement of bid and delivery

21 (1) A takeover bid may be commenced in accordance with either subsection (2) or (7).

(2) A takeover bid may, and an issuer bid must, be commenced by delivering the bid to the holders of securities referred to in section 14(a) in accordance with subsection (6) of this section.

(3) If a bid is commenced under subsection (2), the bid must be filed and, in the case of a takeover bid, delivered to the offeree issuer’s principal office, on the day the bid is delivered under subsection (2) or as soon as practicable after that.

(4) A notice of change or variation in respect of a bid must be filed and, in the case of a takeover bid, delivered to the offeree issuer’s principal office, on the day the notice of change or variation is delivered to holders of securities of the offeree issuer or as soon as practicable after that.

(5) Every directors’ circular and every individual director’s or officer’s circular or any notice of change in relation to it that is delivered to holders of securities of an offeree issuer must be filed, and must be delivered to the offeror’s principal office, on the day the directors’ circular or individual director’s or officer’s circular or the notice of change is delivered to the holders of securities of the offeree issuer, or as soon as practicable after that.

(6) A takeover bid or issuer bid, a takeover bid circular, an issuer bid circular, a directors’ circular, an individual director’s or officer’s circular and every notice of change or variation in the bid or circular must be

(a) mailed by prepaid first class mail to the intended recipient, or

(b) delivered to the intended recipient by personal delivery or in such other manner as the commission may approve,

and any bid, circular or notice so mailed or delivered is deemed to have been delivered and, subject to subsections (8) and (9), is deemed conclusively for the purposes of this instrument to have been dated as of the date on which it was so mailed or delivered to all or substantially all of the persons entitled to receive it.
(7) An offeror may commence a takeover bid 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 British Columbia, or by disseminating the advertisement in a required manner, if

(a) concurrently with, or before, the earlier of the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on its behalf, files and delivers the bid to the offeree issuer’s principal office and files the advertisement,

(b) concurrently with, or before, the earlier of the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on its behalf, requests from the offeree issuer a list of the holders of securities referred to in section 14(a), and

(c) not later than 2 business days after the offeror’s receipt of the list of the holders of securities referred to in section 14(a), the bid is delivered to those holders of securities in accordance with subsection (6).

(8) If a takeover bid is commenced in accordance with subsection (7), the bid is deemed conclusively for the purposes of this instrument to have been dated as of the earlier of the date of first publication or first dissemination of the advertisement referred to in subsection (7).

(9) If a takeover bid has been advertised in accordance with subsection (7), and the offeror, or a person acting on its behalf, has complied with paragraphs (a) and (b) of that subsection but has not yet delivered the bid under paragraph (c) of that subsection, a change or variation to it that is advertised in at least one major daily newspaper of general and regular paid circulation in British Columbia, or disseminated in a manner required under subsection (7), is deemed conclusively for the purposes of this instrument to have been dated as of the earlier of the date of first publication or first dissemination of the advertisement if

(a) the advertisement contains a brief summary of the change or variation,

(b) concurrently with, or before, the earlier of the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on its behalf, files and delivers the notice of change or variation to the offeree issuer’s principal office and files the advertisement, and

(c) the offeror, or a person acting on its behalf, subsequently delivers the bid, and delivers the notice of change or variation, in accordance with subsection (6) and before the expiration of the period under subsection (7)(c).

(10) If an offeror, or a person acting on its behalf, satisfies the requirements of subsection (9), the notice of change or variation is not required to be filed and delivered under subsection (4).

Statement of rights

22 (1) A takeover bid circular, issuer bid circular, directors' circular, director's or officer's circular, or any notice of change or notice of variation that is required under this instrument, must contain a statement of the rights provided by the Act relating to that circular or notice.

(2) If a takeover bid or issuer bid is made in British Columbia and in another province or territory of Canada, inclusion of the following statement in each of any circulars or notices required under this instrument is deemed to be compliance with subsection (1):

"Securities legislation in certain of the provinces and territories of Canada provides securityholders of the offeree issuer with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to such securityholders. However, such rights must be exercised within prescribed time limits. Securityholders should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer."
(3) If the takeover bid or issuer bid is made only in British Columbia, inclusion of the following statement in each of any circulars or notices required under this instrument is deemed to be compliance with subsection (1):
"Securities legislation in British Columbia provides rights of action for damages to securityholders of the offeree issuer, in addition to any other rights they may have at law, if there is a misrepresentation in a circular or notice that is required to be delivered to such securityholders. However, such rights must be exercised within prescribed time limits. Securityholders should refer to the applicable provisions of the British Columbia securities legislation for particulars of those rights or consult with a lawyer."
Timely filing of circular or notice

23 A circular or notice required under this instrument must be filed on the same date that it is first sent to securityholders of the offeree issuer.

Plain language

24 (1) If an issuer is required under this instrument or an exemption under this instrument to file a record or send a record to an investor, the issuer must prepare the record in plain language.

(2) For the purpose of this section, a record is in plain language if its form, style and language enable an ordinary investor, applying reasonable effort, to understand it.


Division 3 - Early warning reports

Interpretation

25 (1) In this Division,

“MD&A” means the discussion and analysis referred to in section 124 of the rules;
offeror” means a person who acquires a security, whether or not by way of take-over bid, issuer bid or offer to acquire.

(2) A person that files a report under this Division, in determining its percentage holding in a class of securities, may rely on

(a) the most recent interim or annual MD&A of the issuer, or

(b) a more recent news release made by the issuer if the news release discloses material information that relates to the number of securities issued by the issuer.

(3) Despite subsection (2), if the person has information that is reasonably considered more accurate than the information contained in the records referred in subsection (2), the person must use the more accurate information.

Reports of acquisitions

26 (1) Every offeror that, except pursuant to a formal bid, acquires beneficial ownership of, or the power to exercise control or direction over, or securities convertible into, voting or equity securities of any class of a public issuer or public mutual fund that, together with such offeror's securities of that class, would constitute 10% or more of the outstanding securities of that class,

(a) must immediately issue and file a press release containing the information required under section 30, and

(b) must, within 2 business days, file a report containing the same information as is contained in the press release issued under paragraph (a).

(2) If an offeror is required to file a report under subsection (1) or a further report under this subsection and the offeror or any person acting jointly or in concert with the offeror acquires beneficial ownership of, or the power to exercise control or direction over, or securities convertible into, an additional 2% or more of the outstanding securities of the class or there is a change in any other material information in such a report, the offeror,

(a) must immediately issue and file a press release containing the information required under section 30, and

(b) must, within 2 business days, file a report containing the same information as is contained in the press release issued under paragraph (a).

(3) During the period beginning on the occurrence of an event in respect of which a report or further report is required to be filed under this section and ending on the expiry of one business day after the date that the report or further report is filed, the offeror or any person acting jointly or in concert with the offeror must not acquire or offer to acquire beneficial ownership of any securities of the class in respect of which the report or further report is required to be filed or any securities convertible into securities of that class.

(4) Subsection (3) does not apply to an offeror that is the beneficial owner of, or has the power to exercise control or direction over, securities that, together with such offeror's securities of that class, constitute 20% or more of the outstanding securities of that class.

Acquisitions during bid by other offeror

27 (1) If, after a formal bid has been made for voting or equity securities of an offeree issuer that is a public issuer or a public mutual fund and before the expiry of the bid, an offeror, other than the person making the bid, acquires beneficial ownership of, or the power to exercise control or direction over, securities of the class subject to the bid which, when added to such offeror's securities of that class, constitute 5% or more of the outstanding securities of that class, the offeror must

(a) not later than the opening of trading on the next business day, issue a press release containing the information required under section 30, and

(b) immediately file a copy of the press release.

(2) If an offeror that has filed or is required to file a press release under subsection (1) or a further press release under this subsection or any person acting jointly or in concert with the offeror acquires beneficial ownership of, or control or direction over, securities of the class subject to the bid which, when added to the securities of that class acquired after the filing of the press release by the offeror and any person acting jointly or in concert with the offeror, aggregates an additional 2% or more of the class of outstanding securities, the offeror must

(a) not later than the opening of trading on the next business day, issue a further press release containing the information required under section 30, and

(b) immediately file a copy of the press release.

Duplicate reports not required

28 If the facts required to be reported or in respect of which a press release is required to be filed under sections 26 and 27 are identical, a report or press release is required only under the provision requiring the earlier report or press release, as the case may be.

Copies of news release and report

29 A person that files a news release and report under section 26 or 27 must immediately send a copy of the news release or report to the public issuer or public mutual fund.

Press release by a person other than an offeror under a formal bid

30 (1) In this section, “securities of the offeree issuer” means

(a) voting or equity securities issued by the offeree issuer that are of the class of securities acquired in an acquisition described in section 26(1) or (2), and

(b) securities of each class of voting or equity securities that is convertible within the meaning of section 3 into securities of the class described in paragraph (a).

(2) A press release or further press release required under section 26 or 27 must set out

(a) the name of the offeror,

(b) the number of securities of the offeree issuer that were acquired in the acquisition that gave rise to the requirement under section 26 or 27 to issue the press release or further press release,

(c) the beneficial ownership of, and the control and direction over, any of the securities of the offeree issuer, by the offeror and all persons acting jointly or in concert with the offeror, immediately after the acquisition described in paragraph (b),

(d) the name of the market in which the acquisition described in paragraph (b) took place, and

(e) the purpose of the offeror and all persons acting jointly or in concert with the offeror in making the acquisition described in paragraph (b), including any intention of the offeror and all persons acting jointly or in concert with the offeror to increase the beneficial ownership of, or control or direction over, any of the securities of the offeree issuer.

Exemption from duplicate reporting

31 (1) If an offerorfiles the report required under section 26, any person acting jointly or in concert with the offeror is not required to issue or file a report under section 26 disclosing the same information.

(2) If an offerorissues and files the new release required under section 27, any person acting jointly or in concert with the offeror is not required to issue and file a news release under section 27 disclosing the same information.

Exemption for eligible institutional investors providing alternative monthly reports

32 An eligible institutional investor as defined in section 1 of the rules is exempt from this Division if it files the reports required under section 153 of the rules.

Exemption for eligible institutional investors filing in other jurisdiction

33 An eligible institutional investor as defined in section 1 of the rules is exempt from this Division if, in relation to a public issuer or public mutual fund that is a reporting issuer in another province, it

(a) complies with the requirements, in the other province, designated for the purpose of this section, and

(b) files with the commission all records it is required to file under the designated requirements when it files them in the other province.

Exemption for issuer event, underwriter, pledge or mutual fund

34 Sections 26(1) and 26(2) do not apply to

(a) a person that acquires or disposes of securities because of an event that affects all holdings of a class of the issuer’s securities in the same manner on a per security basis,

(b) a person holding securities in the person’s capacity as an underwriter, during the underwriting period, if the person is engaged in the business of an underwriter,

(c) a person that controls securities as a pledgee in the person’s ordinary course of business, or

(d) securities of a mutual fund subject to National Instrument 81-102 Mutual Funds.

Exemption from moratorium

35 Section 26(3) does not apply to acquisitions or offers by

(a) a registered adviser or an adviser in another province or a foreign jurisdiction that is registered under the securities laws of the other province or foreign jurisdiction for the purpose of acting as an adviser acting on behalf of a person without the direction or prior knowledge of the person if the adviser is not acting as principal,

(b) a person who is an approved specialist or market maker recognized by a stock exchange or an over the counter market, or

(c) an eligible institutional investor as defined in section 1 of the rules.


Division 4 - Exemptions

Interpretation

36 (1) In this Division,the market price of securities for which there is a published market is to be determined in accordance with this section.

(2) The market price of a class of securities for which there is a published market, at any date, is an amount equal to the simple average of the closing price of securities of that class for each of the business days on which there was a closing price falling not more than 20 business days before that date.

(3) If a published market does not provide a closing price, but provides only the highest and lowest prices of securities traded on a particular day, the market price of the securities, at any date, is an amount equal to the average of the simple averages of the highest and lowest prices for each of the business days on which there were highest and lowest prices falling not more than 20 business days before that date.

(4) If there is more than one published market for a security, the market price for the purposes of subsections (2) and (3) must be determined as follows:

(a) if only one of the published markets is in Canada, the market price must be determined solely by reference to that market;

(b) if there is more than one published market in Canada, the market price must be determined solely by reference to the published market in Canada on which the greatest volume of trading in the particular class of securities occurred during the 20 business days immediately preceding the date as of which the market price is being determined;

(c) if there is no published market in Canada, the market price must be determined solely by reference to the published market on which the greatest volume of trading in the particular class of securities occurred during the 20 business days immediately preceding the date as of which the market price is being determined.

(5) If there has been trading of securities in a published market for fewer than 10 of the 20 business days immediately preceding the date as of which the market price of the securities is being determined, the market price is the average of the following prices established for each day of the 20 business days immediately preceding that date:

(a) the average of the bid and ask prices for each day on which there was no trading;

(b) the closing price of securities of the class for each day that there has been trading, if the published market provides a closing price;

(c) the average of the highest and lowest prices of securities of that class for each day that there has been trading, if the published market provides only the highest and lowest prices of securities traded on a particular day.

(6) Despite subsection (2), (3), (4) and (5), for the purpose of section 37(1)(a), if an offeror acquires securities on a published market, the market price for those securities is the price of the last board lot of securities of that class purchased, before the acquisition by the offeror, by a person that was not acting jointly or in concert with the offeror.

Exempt takeover bids

37 (1) A takeover bid is exempt from sections 14 to 21 if any of the following apply:

(a) the bid meets all the following conditions:

(i) the bid is for not more than 5% of the outstanding securities of a class of securities of the issuer;

(ii) the aggregate number of securities acquired by the offeror and any person acting jointly or in concert with the offeror within any period of 12 months in reliance on the exemption provided by this paragraph does not, when aggregated with acquisitions otherwise made by the offeror and any person acting jointly or in concert with the offeror within the same 12 month period, constitute in excess of 5% of the outstanding securities of that class of the issuer at the beginning of the 12 month period;

(iii) if there is a published market for the securities acquired, the value of the consideration paid for any of the securities acquired is not in excess of the market price at the date of acquisition plus reasonable brokerage fees or commissions actually paid;

(b) the bid meets all of the following conditions:

(i) purchases are made from not more than 5 persons in aggregate, including persons outside British Columbia;

(ii) the bid is not made generally to securityholders of the class of securities that is the subject of the bid;

(iii) the value of the consideration paid for any of the securities, including brokerage fees or commissions, is not greater than 115% of the market price of securities of that class at the date of the bid;

(c) the bid meets all the following conditions:

(i) the offeree issuer is not a public issuer or public mutual fund;

(ii) there is not a published market in respect of the securities that are the subject of the bid;

(iii) the number of holders of securities of that class is not more than 50, exclusive of holders who

(A) are in the employment of the offeree issuer or an affiliate of the offeree issuer, or

(B) were formerly in the employment of the offeree issuer or an affiliate of the offeree issuer and who while in that employment were, and have continued after that employment to be, securityholders of the offeree issuer;

(d) the bid meets all of the following conditions:

(i) the number of holders in British Columbia of securities of the class subject to the bid is fewer than 50;

(ii) the securities held by such holders constitute, in aggregate, less than 2% of the outstanding securities of that class;

(iii) the bid is made in compliance with the laws of a jurisdiction that is recognized for the purposes of this subparagraph by the commission;

(iv) all material relating to the bid that is sent by the offeror to holders of securities of the class that is subject to the bid is concurrently sent to all holders in British Columbia of such securities and is filed;

(e) the bid meets all of the following conditions:

(i) the bid is for securities in respect of which there is no published market;

(ii) purchases are made from not more than 5 persons in the aggregate, including persons outside of British Columbia;

(iii) the bid is not made generally to securityholders of the class of securities that is the subject of the bid.

(2) For the purposes of subsection (1)(c),

(a) if an offeror makes an offer to acquire securities from a person and the offeror knows or ought to know after reasonable enquiry that one or more other persons on whose behalf that person is acting as nominee, agent, trustee, executor, administrator or other legal representative has a direct beneficial interest in those securities, then each of such others are to be included in the determination of the number of persons to whom the offer to acquire has been made, but if

(i) an inter vivos trust has been established by a single settlor, or

(ii) an estate has not vested in all persons beneficially entitled to it,

the trust or estate is to be considered a single securityholder in such determination, or
(b) if an offeror makes an offer to acquire securities from a person and the offeror knows or ought to know after reasonable enquiry that the person acquired the securities in order that the offeror might make use of the exemption provided by subsection (1) (c), then each person from whom those securities were acquired are to be included in the determination of the number of persons to whom the offer to acquire has been made.

Exempt issuer bids

38 An issuer bid is exempt from sections 14 to 17, 19 and 21 if any of the following apply:

(a) the securities are purchased, redeemed or otherwise acquired in accordance with terms and conditions attaching to them that permit the purchase, redemption or acquisition of the securities by the issuer without the prior agreement of the owners of the securities, or the securities are acquired to meet sinking fund or purchase fund requirements;

(b) the purchase, redemption or other acquisition is required by the instrument creating or governing the class of securities or by the statute under which the issuer was incorporated, organized or continued;

(c) the securities carry with them or are accompanied by a right of the owner of the securities to require the issuer to redeem or repurchase the securities and the securities are acquired pursuant to the exercise of the right;

(d) the securities are acquired from a current or former employee of the issuer or of an affiliate of the issuer, and if there is a published market in respect of the securities,

(i) the value of the consideration paid for any of the securities acquired is not greater than the market price of the securities at the date of the acquisition, and

(ii) the aggregate number or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer within a period of 12 months in reliance on the exemption provided by this paragraph is not greater than 5% of the securities of that class issued and outstanding at the beginning of the period;

(e) the securities are acquired from

(i) a director, officer, employee or consultant of the issuer or of an affiliate of the issuer,

(ii) a spouse of a director, officer, employee or consultant of the issuer or of an affiliate of the issuer,

(iii) a non-individual person of which a majority of the voting securities are owned by, or a majority of the directors are, persons described in paragraph (i) or (ii), or

(iv) a trust or estate of which all the beneficiaries or a majority of the trustees are individual persons described in paragraph (i) or (ii).

and
(v) the purpose of the acquisition by the issuer is to

(A) fulfill withholding tax obligations, or

(B) provide payment of the exercise price of a stock option,

(vi) the acquisition by the issuer is made in accordance with the terms of a plan that specifies how the value of the securities acquired by the issuer is determined,

(vii) in the case of securities acquired as payment of the exercise price of a stock option, the date of exercise of the option is chosen by the option holder, and

(viii) the aggregate number of securities acquired by the issuer within a 12 month period under this section does not exceed five percent of the outstanding securities of the class or series at the beginning of the period.

(f) the bid is made through the facilities of an exchange designed for the purpose of this paragraph and the bid complies with the regulatory instruments of the exchange;

(g) following the publication of a notice of intention in the required form and in the manner required in this instrument, the issuer purchases securities in the normal course in the open market, including through the facilities of an exchange, if the aggregate number, or, in the case of convertible debt securities, the aggregate principal amount, of securities acquired by the issuer within a period of 12 months in reliance on the exemption provided by this paragraph is not greater than 5% of the securities of that class issued and outstanding at the beginning of the period;

(h) the bid meets all the following conditions:

(i) the issuer is not a public issuer or public mutual fund;

(ii) there is not a published market in respect of the securities that are the subject of the bid;

(iii) the number of holders of securities of the issuer is not more than 50, exclusive of holders who

(A) are in the employment of the issuer or an affiliate of the issuer, or

(B) were formerly in the employment of the issuer or an affiliate of the issuer and who while in that employment were, and have continued after the employment to be, securityholders of the issuer;

(i) the bid meets all of the following conditions:

(i) the number of holders in British Columbia of securities of the class subject to the bid is fewer than 50;

(ii) the securities held by such holders constitute, in aggregate, less than 2% of the outstanding securities of that class;

(iii) the bid is made in compliance with the laws of a jurisdiction that is recognized for the purposes of this subparagraph by the commission;

(iv) all material relating to the bid that is sent by the offeror to holders of securities of the class that is subject to the bid is concurrently sent to all holders in British Columbia of such securities and is filed.

Notice of intention

39 A notice of intention referred to in section 38(g) must be filed and a press release in respect of the issuer bid that is the subject of the notice must be issued at least 5 days before the commencement of the issuer bid.

Exemption for forms used in other province

40 A requirement in this instrument to file a record in a required form does not apply to a person that files with the commission the record it is required to file in another province designated for the purpose of this section.