What must happen before the expiry of a takeover bid and after a formal bid...

Atakeover bidis an offer made by an acquirer to purchase a significant portion of a company’s voting securities, typically to gain control. Canadian securities regulations require specific steps and conditions to be met during a formal takeover bid.

Key Requirement:

Once a formal bid is made and before the bid's expiry:

If the bid is successful and securities have been tendered,the acquirer must make payment for all the acquired shares as per the terms of the bid. This is a legal requirement under Canadian takeover rules, ensuring that tendering shareholders receive their compensation promptly.

Review of Other Options:

A. At least 20% of the target's outstanding preferred shares must be tendered to the bid.

Incorrect. There is no specific regulatory requirement for a percentage of preferred shares to be tendered in a takeover bid.

B. At least 25% of the target's outstanding voting shares must be tendered to the bid.

Incorrect. Canadian regulations do not require a minimum percentage of voting shares tendered for a bid to proceed. However, the acquirer may set conditions for the bid, such as acquiring a specific percentage of shares to gain control.

D. A press release must be issued by every investor acquiring 6% or more of the securities to the bid.

Incorrect. While certain thresholds (e.g., 10%) may trigger disclosure requirements under early warning rules, this does not apply universally to all participants in the bid or relate specifically to the takeover bid process.

Why C is Correct:

Canadian securities laws mandate that all tendered shares must be paid for once the bid's conditions are satisfied or waived, and the bid has expired. This ensures transparency and fairness to shareholders who tender their shares during the bid process.

References:

Canadian Securities Course (CSC), Volume 1, Chapter 9: Equity Transactions. Explanation of the takeover bid process and payment requirements​.

National Instrument 62-104: Takeover Bids and Issuer Bids. Requirements for payment and timing in a takeover bid.