target company’s substantial security holders in contracts with the offeror or with a related company of the offeror.

The nature of the interest in any of these contracts must be disclosed as well as the extent and monetary value (if it can be quantified) of the interest. However, the extent of the interest and monetary value does not need to be disclosed for contracts entered into in the offeror’s ordinary course of business and on usual terms and conditions.

Notifications and information to the Panel, the Exchange, parties to takeovers and others

Notification obligations of the target company and offeror

Rule 42 of the Code provides that when a takeover notice is received, a listed target company must immediately advise the Exchange, and an unlisted target must advise its shareholders, that a takeover notice has been received.

As well, offerors bidding for a listed target are now required to send the takeover notice (at the time it is sent to the target company), and all the information required to accompany a takeover notice, to the target’s Exchange. Unlisted targets must now inform their shareholders about the identity of the offeror and the main terms and conditions of the prospective offer.

The offeror or the target must also send, free of charge, the takeover notice and information that is sent with the takeover notice, to any person who asks for such information, within one day of receiving a request. This is to ensure that market analysts and commentators have rapid and free access to the primary documents for a proposed takeover, and enable a well-informed market.

Documents required to be sent to the Panel

The Panel routinely reviews documents relating to takeovers. Most of these are required by rule 47 to be sent to the Panel at the same time that they are sent to their intended recipients. However, some information that is sent to shareholders about a takeover is not information required by the Code, for example, a letter from the offeror encouraging shareholders to accept the offer.

The amendments to the Code require all information about takeovers that is sent to shareholders or made public (including letters, advertisements and the like) to be sent to the Panel.

The anomaly in rule 47 of having to provide the target company’s securities register to the Panel has been fixed by the technical amendments.³ However, the securities register must be sent to the Panel on request.

Notification about progress of takeover offer

The Code had not required offerors to periodically update the Panel and shareholders about the level of acceptances received during the takeover offer.

The changes to the Code require progress in a takeover to be notified each time the level of acceptances increases by 1% or more of the total issued securities in each class under offer. An offeror must notify the Panel and the target company, and the Exchange if the offeror or the target company is listed.

Timing issues

Record dates

Rule 43 of the Code required that the record date (for determining who are the offerees for the purposes of the offer) must be not more than 10 days before the date of the offer. Offerors must send their offer document to offerees by no later than three days after the date of their offer. Effectively, this rule set an offer timeline which could not be altered, even if the circumstances of the offeror or the target company changed after the record date was set.

The technical amendments allow for changing the record date after it has been set. If the offer cannot be made within 13 days of the original record date, but can still be made in the 14 to 30 day-period in which an offer must be made after sending a takeover notice, the offeror can now notify a new record date and proceed with its offer. This reduces the likelihood of having to issue a new takeover notice and restart the offer process.

Date by which an offer is to become unconditional

Rule 25 provides that an offer that is subject to conditions must specify a date (the specified date) by which it is to become unconditional, and limits that date by relating it to the length of the offer period.

If this rule is interpreted literally, the specified date could not be changed after it was specified in the offer document. However, the Code allows for the offer period to be extended, so if the specified date is referenced to the offer period the specified date will change if the offer period is changed.

The technical amendments explicitly allow the specified date to be changed (as a permitted variation under rule 27) if the offer period is extended. The new specified date must be stated and included in the variation notice sent under rule 28. However, the specified date is still subject to the time limits set out in rule 25.