On March 14, 2013, the Canadian Securities Administrators (CSA) published for comment proposed National Instrument 62-105 Security Holder Rights Plans (Proposed Rule) and proposed Companion Policy 62-105CP Security Holder Rights Plans (Proposed Policy).
The Proposed Rule and Policy establish a regulatory framework for Rights Plans or poison pills in all CSA jurisdictions. In general, the Proposed Rule will allow Rights Plans adopted by boards of directors of issuers to remain in place provided majority security holder approval of the Rights Plan is obtained within 90 days. In order for the Rights Plan to remain effective it must be approved by the shareholders within the 90 day period.
This approach would change the current regulatory treatment of Rights Plans. Currently, if a hostile bidder asks a Canadian securities regulatory authority to cease trade a Rights Plan to render it inoperative, that authority will generally do so after a specified time (normally 30-45 days).