The Canadian Securities Administrators have issued a staff notice that aims to clarify who should be considered as the offeror in a take-over bid when a company, income trust or other entity uses an acquisition entity to make the bid.

CSA staff have observed that in some cases where parties have acted jointly, only one party has signed the certificate page of the take-over bid circular.

The notice says that if a company, income trust or other party (the primary party) uses an acquisition entity, subsidiary or other affiliate (the named offeror) to make a take-over bid, the primary party may be making an indirect bid and therefore the named offeror and the primary party may be considered as joint offerors.

Where a take-over bid is made by a wholly owned entity, CSA staff regard the entity’s parent to be a joint offeror. In that case, both parties must sign the circular as offerors.

If the named offeror is not a wholly owned entity, CSA staff will consider whether the primary party is a joint offeror under the bid by examining its role in that bid.

In making such a determination, CSA staff will consider issues such as: whether the primary party played a significant role in initiating, structuring and negotiating the take-over bid; whether it controls any of the terms of the offer, and, whether it is financing the bid.

“A yes answer to any of these questions may lead staff to conclude that the primary party is making an indirect offer, and is a joint offeror under the bid,” it says. “When that is the case, both the named offeror and the primary party must sign the bid circular as offerors.”