On May 14, 2026, the Canadian Securities Administrators (CSA) opened a 90-day comment period for a series of proposed amendments and changes to the issuer bid, take-over bid and beneficial ownership reporting regimes. The proposed amendments and changes to National Instrument 62-104 – Take-Over Bids and Issuer Bids would, among other things, introduce a new issuer bid exemption to allow selective repurchases by an issuer of securities of its own issue, subject to certain parameters (Proposed New Issuer Bid Exemption).
A summary of the Proposed New Issuer Bid Exemption is detailed below.
Please see our separate bulletin, CSA Proposes Significant Amendments to Early Warning Reporting Regimes and Certain Take-Over Bid Rules, for a summary of the proposed changes to the take-over bid and beneficial ownership reporting regimes.
Background
Canadian securities laws restrict the manner in which an issuer may repurchase its securities. Currently, unlike the Canadian take-over bid rules that include a “private agreement” exemption for third-party acquirers, the issuer bid rules do not permit repurchases negotiated on a bilateral basis, such that to repurchase shares, issuers must either conduct a formal bid in compliance with the full issuer bid requirements, conduct a normal course issuer bid under stock exchange rules, or obtain formal exemptive relief. The Proposed New Issuer Bid Exemption responds to growing stakeholder concerns that the existing regime is overly restrictive compared to jurisdictions like the United States and can inhibit investment by limiting liquidity options for individual shareholders that own a significant percentage (generally 5% or more) of an issuer’s outstanding voting shares.
The CSA has identified several policy objectives underpinning the Proposed New Issuer Bid Exemption: enhancing the competitiveness of Canadian capital markets, providing issuers with greater flexibility in capital allocation, improving liquidity for investors holding larger blocks of securities, and maintaining market fairness by limiting the exemption to securities with a liquid market and by limiting the consideration that can be paid to the shareholder relative to the prevailing market price on the bid date. This approach also reduces regulatory burden by codifying relief that previously required formal applications.
Selective Repurchase Proposal
Under the Proposed New Issuer Bid Exemption, issuers would be permitted to repurchase up to 5% of the outstanding securities of a class within a 12-month period. Repurchases would be limited to transactions with no more than five persons in no more than five transactions in the aggregate during that period, providing issuers with flexibility, including the option to repurchase from a particular person on five separate instances during that period, while preventing the establishment of de facto normal course repurchase programs with select shareholders.
Several safeguards are built into the Proposed New Issuer Bid Exemption. The consideration paid for any securities acquired, including brokerage fees and commissions, must be less than the closing price of the securities on the market on which it is principally traded on the bid date. A liquid market in the class of securities must exist at the date of the bid, and the issuer’s board of directors must determine that the repurchase would not reasonably be expected to materially reduce market liquidity or have a significant negative effect on market price. These conditions are designed to mitigate concerns about preferential treatment, as non-participating securityholders should be able to sell their securities on the open market at an equal or greater price.
Issuers relying on the Proposed New Issuer Bid Exemption would be required to issue and file a news release after making the bid and before the opening of trading on the next trading day, disclosing the details of the transaction and the aggregate number of securities acquired in the preceding 12-month period under the Proposed New Issuer Bid Exemption.
Notably, the 5% limit under the Proposed New Issuer Bid Exemption would operate independently of, and could be used in conjunction with, other issuer bid exemptions. Securities acquired through normal course issuer bids or other exemptions would not reduce the amount available under the Proposed New Issuer Bid Exemption, and vice versa. The CSA intends to engage with designated exchanges regarding corresponding rule amendments to ensure that selective repurchases do not impact an issuer’s use of the normal course issuer bid exemption.
The CSA also proposes to clarify the application of issuer bid restrictions to “offshore” repurchases — repurchases from shareholders outside the applicable local jurisdictions where Canadian securities laws applicable to issuer bids may not apply. In these situations, the CSA notes that the local securities commissions retain public interest jurisdiction over such transactions and may determine to intervene in any given transaction if the circumstances raise public interest concerns. However, they go on to state that, in general, offshore repurchases will not raise public interest concerns if an issuer conducts repurchases from a securityholder who is not in Canada or a resident of Canada in the circumstances and manner consistent with those outlined in the Proposed New Issuer Bid Exemption. Issuers that have questions regarding whether any particular repurchase would raise public interest concerns (including, for example, transactions that would not necessarily fit within the parameters of the Proposed New Issuer Bid Exemption) are urged to contact their applicable securities regulatory authority.
Next Steps
The 90-day comment period for the Proposed New Issuer Bid Exemption and the other proposed amendments and changes closes on August 12, 2026.
For more information, please contact the authors or any other member of our Capital Markets group.
