Borden Ladner Gervais (BLG) says that uncertainties in Canada’s regulatory system could pose problems for the securities industry in 2016.

BLG has published a list of the top ten legal risks that Canadian businesses face this year, and one item is the proposed takeover bid regime announced by the Canadian Securities Administrators (CSA) in March of 2015. This new framework will regulate defensive tactics such as the use of “poison pills” by target companies, but BLG notes that the rules have yet to be to be finalized and describes the situation as "regulatory purgatory".

"This [uncertainty] is making it difficult for parties involved in hostile bid transactions, as bidders must comply with the existing takeover rules, while targets implement defensive tactics based on the proposed regime that is not yet in force and which may yet be subject to change," says BLG. "At a time when markets are in flux (particularly for those industries affected by commodity price uncertainty) the addition of regulatory uncertainty may result in fewer hostile transactions and in circumstances where defensive tactics are challenged, may result in ad hoc decisions by securities regulators that in turn will add uncertainty."

BLG also notes that the Cooperative Capital Market Regulatory System (CCMRS) is poised to change the way securities regulations are administered. "Should the CCMRS become operational in 2016, the changes brought by the CCMRS will start to impact businesses, as they struggle to understand how the new 'harmonized' system will affect them and, in particular, will likely result in regulatory delay, as the various securities regulators find their footing in establishing a new working relationship with each other," concludes the law firm.