On February 25, 2016, the Canadian Securities Administrators published the text of anticipated amendments to the early warning system which are expected to come into force as early as May 9, 2016. Investors with outstanding early warning reports should take note of these amendments, as they will have implications for their ongoing reporting obligations.

1. SkyLaw Professional Corporation Tel: 1.416.759.5299 3 Bridgman Avenue, Suite 204
Toronto, ON Canada M5R 3V4
www.skylaw.ca
Fax: 1.866.832.0623
Email: andrew.cooley @skylaw.ca
Canadian Securities Administrators Adopt Amendments to Early Warning System
On February 25, 2016, the Canadian Securities Administrators, the umbrella organization of
securities regulators in Canada, published the text of anticipated amendments to the early
warning system. According to the CSA, the amendments are intended to provide greater
transparency about significant holdings of issuers’ securities and to enhance the quality and
integrity of the early warning system.
In Ontario, the amendments will come into force on the later of May 9, 2016 and the date that
certain provisions of the Budget Measures Act, 2015 come into force.
Investors with outstanding early warning reports should take note of these amendments once
they come into force, as they will have implications for their ongoing reporting obligations.
Summary of Amendments
As set out in the CSA notice, the amendments will:
• require disclosure of decreases in ownership, control or direction of 2% or more;
• require disclosure when a securityholder’s ownership, control or direction falls below
the early warning reporting threshold;
• exempt borrowers and lenders of securities in certain circumstances;
• make the Alternative Monthly Reporting System unavailable to eligible institutional
investors who solicit proxies from securityholders in certain circumstances;
• require disclosure in the early warning report of an interest in a related financial
instrument, a securities lending arrangement and other agreements, arrangements or
understandings involving an issuer’s securities;
• enhance the disclosure in the early warning report by requiring more detailed
information regarding the intentions of the acquiror and the purpose of the
transaction;
• require the early warning report to be certified and signed;
• clarify the timeframe to issue and file the news release and early warning report; and
• further streamline the information required in the news release.

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SkyLaw Professional Corporation Tel: 1.416.759.5299 3 Bridgman Avenue, Suite 204
Toronto, ON Canada M5R 3V4
www.skylaw.ca
Fax: 1.866.832.0623
Email: andrew.cooley@skylaw.ca
Certain of the amendments were initially proposed in March 2013, when the CSA published for
comment proposed amendments to the early warning system. The CSA has adopted some but
not all of the initial proposed amendments. While the CSA previously considered reducing the
reporting threshold from 10% to 5%, in response to comments received, it has concluded that the
reporting threshold should remain at 10%.
Additional Disclosure Requirements
The early warning system currently requires additional disclosure once a securityholder has
acquired an additional 2% or more of an issuer’s outstanding securities. The amendments also
will now require additional disclosure of decreases in ownership of 2% or more as well as when
the securityholder’s ownership decreases below 10%. The current requirement to provide
additional disclosure if there is a change in a material fact contained in a previously filed early
warning report will continue to apply.
Enhanced Disclosure
The amendments require detailed disclosure about the class of securities and the material terms
of related financial instruments, any securities lending arrangements and other agreements,
arrangements or understandings involving an issuer’s securities. According to the CSA, these
amendments are intended to result in more comprehensive disclosure about an acquiror’s
economic or voting interests in the securities and to address the transparency concerns associated
with these types of agreements, arrangements and understandings.
The amendments also require additional disclosure regarding the purpose of the transaction and
the acquiror’s plans or future intentions with respect to the issuer.
AMRS Disqualification
The AMRS allows certain eligible institutional investors, including financial institutions, pension
funds, mutual funds, and certain investment managers, to file reports on a monthly basis, when
their securities ownership increases to 10% or more, and thereafter when their securities
ownership increases or decreases past thresholds of 2.5% or decreases below 10%. Currently,
eligible institutional investors who make or intend to make a formal take-over bid or who
propose or intend to propose a reorganization, amalgamation, merger, arrangement or similar
business combination with an issuer that would give them effective control over the issuer or its
successor are disqualified from relying on the AMRS.
Once the amendments come into force, an eligible institutional investor who solicits proxies
from securityholders in support of a director nominee other than the individuals proposed by
management or in support of a reorganization, amalgamation, merger, arrangement or similar
corporate action involving the securities of an issuer not supported by management, or in
opposition to a similar corporate action proposed by management, also will be disqualified from
relying on the AMRS. An eligible institutional investor who is relying on the AMRS, upon
engaging in any solicitation activities, would be required to immediately issue and file a news
release and within two business days file an early warning report disclosing its intentions. For a
period of 10 days after the news release is filed, the eligible institutional investor would be

3. 3
SkyLaw Professional Corporation Tel: 1.416.759.5299 3 Bridgman Avenue, Suite 204
Toronto, ON Canada M5R 3V4
www.skylaw.ca
Fax: 1.866.832.0623
Email: andrew.cooley@skylaw.ca
restricted from acquiring any additional securities.
The term “solicit” is broadly defined and includes any communication under circumstances that
to a reasonable person will likely result in the giving, withholding or revocation of a proxy.
While the CSA previously considered extending the disqualification criteria to include an
intention to solicit proxies, it concluded to remove this concept to avoid uncertainty.
Timing Requirements
The amendments have clarified that the news release must be issued and filed no later than the
opening of trading on the next business day following the acquisition. The early warning report
will continue to be due within two business days of the acquisition.
Derivatives and Securities Lending or Borrowing
The amendments have added new guidance to National Policy 62-203 regarding the
circumstances under which an investor may have to include in the early warning threshold
calculation an equity swap or similar derivative arrangement. The amendments also provide an
exemption for lenders from the early warning requirements for securities transferred or lent
pursuant to certain specified securities lending arrangements, as well as an exemption for
borrowers, subject to certain conditions.