The Securities Commission granted an exemption to an issuer from the requirement to take up all securities deposited under an issuer bid before extending the bid. This decision was made in the context of an issuer bid by way of a modified Dutch auction procedure, where the issuer may want to extend the bid if it is undersubscribed and the market price of the shares is not greater than the proposed price range under the bid.
The exemption was necessary because the issuer could not determine the purchase price per share without knowing all tenders, which would not be possible if shares had to be taken up before extending the bid. The exemption was granted subject to conditions, including that the issuer must take up and pay for shares deposited and not withdrawn as described in the issuer bid circular, and that the issuer must be eligible to rely on the Liquid Market Exemption.
The relevant legislative provisions underpinning the outcome are subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids, which normally prohibits extending an issuer bid without first taking up all deposited securities, and the Liquid Market Exemption from the formal valuation requirements under Multilateral Instrument 61-101. The decision was made by the Ontario Securities Commission, which served as the principal regulator for this application, and the exemption was intended to be relied upon in multiple Canadian jurisdictions.