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June 28, 2016 - view full issue

TSX Proposes Amendments to Introduce Website Disclosure Requirements and to Amend Security Based Compensation Disclosure

By Vikram Dhir

The Toronto Stock Exchange (“TSX”) recently published proposed amendments to: (i) introduce website disclosure requirements for TSX listed issuers (the “Website Amendments”); and (ii) amend the disclosure requirements regarding security based compensation arrangements (the “SBC Amendments”, and together with the Website Amendments, the “Amendments”) in the TSX Company Manual. The Amendments will be effective upon approval by the Ontario Securities Commission following the public comment period. Comments on the Amendments were initially requested by June 27, 2016. The TSX is extending the comment period to July 15, 2016 as a result of requests from stakeholders.

Website Amendments

The Website Amendments are intended to provide capital market participants with ready access to key security holder documents. Listed issuers would be required to maintain a publicly accessible website posting current copies of:

  1. constating documents including articles, trust indentures, partnership agreements, by-laws and other similar documents;
  2. corporate policies that impact meetings of security holders and voting;
  3. security holder rights plans;
  4. security based compensation arrangements (“Arrangements”); and
  5. certain corporate governance documents, including charters of board committees, code of ethical business conduct, position descriptions, board mandate, anti-corruption policies and other environmental and social policies and whistleblower policies.

The Website Amendments also simplify the disclosure requirement for issuers that have adopted a majority voting policy by substituting the requirement for issuers to describe such policies in their annual materials sent to security holders with the requirement to instead post the policies on their websites.

Security Based Compensation Amendments

The SBC Amendments are intended to simplify the disclosure requirements with respect to Arrangements (for meetings where security holder approval will be sought for an Arrangement (“Approval Meetings”) and for other meetings (“Other Annual Meetings”), and to introduce a new form, Form 15 with a user-friendly table for the simplified disclosure. The Form 15 has been developed to reflect more current Arrangements filed with the TSX. Issuers would be required to disclose the items in Form 15 in meeting materials for Approval Meetings and Other Annual Meetings, including the following:

  • maximum number of securities issuable;
  • outstanding awards;
  • burn rate (being the rate at which an issuer uses up securities available for grant under an Arrangement);
  • eligibility criteria for awards;
  • vesting; and
  • amendments to an Arrangement or previously issued awards.

Additional disclosure required for Approval Meetings:

  • Other key terms in sufficient detail as may reasonably be required by a security holder to approve the Arrangement or amendments thereto.

The following current disclosure requirements will no longer be required under the proposed SBC Amendments: (i) maximum securities available to insiders; (ii) maximum securities available to one person or company; (iii) method for determining exercise price; (iv) method for determining purchase price; (v) formula for calculating market appreciation of stock appreciation rights ("SARs"); (vi) ability to transform stock options into SARs involving issuance of securities from treasury; (vii) term; (viii) causes of cessation of entitlement and effect of employee termination; (ix) assignability; (x) procedure for amending; (xi) financial assistance; and (xii) entitlements previously granted but subject to security holder ratification.

To view the TSX’s request for comments in respect of the Amendments, see here.

If you have questions about the proposed Amendments, contact any member of Clark Wilson's Corporate Finance & Securities Group.