News Release
CSA: Regulators Act to Protect Investors from Misleading Mini-Tenders
Dec 13, 1999
Canadian securities regulators, concerned that investors might be selling stock at below market price based on misleading information, have issued new guidelines on mini-tender offers.
CSA Staff Notice 61-301: Staff Guidance on the Practice of “Mini-Tenders” states that firms or individuals seeking to acquire shares at below-market prices should include the following information in their mini-tender offers:
- a clear warning that the offering price is below the current market price of those securities;
- a statement that shareholders should consult their financial adviser;
- the principal market for the securities sought to be acquired, the date of the offer, and the market price of the securities immediately before the earlier of the public announcement of the offer or the date of the offer;
- a description of the withdrawal rights of the security holders under the offer and details for the withdrawal procedure; if no such withdrawal rights exist, a clear statement should be included to that effect;
- if applicable, a statement that the offeror could revoke its offer at any time; and
- a clear calculation of the final price to be paid for the target securities.
In addition, the Canadian Securities Administrators (CSA) are advising dealers that they are not obligated under securities laws or policies to forward below-market mini-tender offers to their clients.
A mini-tender is an offer to purchase a limited number of shares of a public company at below current market price. Mini-tenders are similar to, but are not, take-over bids, which historically offer a premium to the current price. In staff’s opinion, causing investors to tender to a mini-tender based on such a misunderstanding can be abusive of the capital markets and contrary to applicable anti-fraud provisions of certain securities legislation.
If staff feel that mini-tenders are conducted in a manner prejudicial to the public interest, staff will recommend that appropriate action be taken, which could include a cease trade order in respect of the mini-tender or the person or company making the mini-tender.
A copy of the CSA Staff Notice can be found on the Ontario Securities Commission website at www.osc.gov.on.ca, the Alberta Securities Commission website at www.albertasecurities.com, the British Columbia Securities Commission website at www.bcsc.bc.ca, and the Commission des valeurs mobilières du Québec website at www.cvmq.com.
The CSA, comprised of the thirteen provincial and territorial securities regulatory authorities, administer the Canadian Securities Regulatory System to protect investors and give Canada an effective securities market.
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