Photo of Justine Connors

At the end of May 2016, the TSX published for comment proposed amendments to the TSX Company Manual (Company Manual) 1) introducing website disclosure requirements for TSX-listed issuers; and 2) amending disclosure requirements regarding securities-based compensation arrangements (Arrangement) including the introduction of Form 15 – Disclosure of Security-Based Compensation Arrangements.

Website disclosure

The TSX

On November 28, 2013, the Toronto Stock Exchange (TSX) published proposed amendments to the TSX Company Manual (the Manual) and requested comments on the proposed amendments (the Amendments), such comments to be delivered by January 13, 2014. The proposed amendments would 1) amend Section 611 of the Manual to allow issuers listed on the TSX to adopt security-based compensation arrangements (Compensation Arrangements) for employees of a target issuer in the context of an acquisition without security holder approval under certain circumstances (the Compensation Arrangement Amendment); and 2) amend Section 626 of the Manual toclarify the definition of a “backdoor listing” (the Backdoor Listing Amendment).

Arrangement Amendment

Background

Currently, Section 613 of the Manual provides that any Compensation Arrangement adopted by a listed issuer must be approved by its security holders. There are two exceptions to this rule: 1) listed issuers may provide a Compensation Arrangement as an inducement for employment to an officer, provided the number of securities issuable does not exceed 2% of the issued and outstanding securities over a 12-month period; and 2) listed issuers may assume a Compensation Arrangement of a target issuer in the context of an acquisition, in which case the number of securities issuable under such Compensation Arrangement will be taken into account to determine whether security holder approval is required for the acquisition. With the Compensation Arrangement Amendment, the TSX proposes to add a third exception.

The Proposed Amendment

The Compensation Arrangement Amendment would create a new exception that would allow listed issuers to adopt Compensation Arrangements for employees of a target issuer in the context of an acquisition without security holder approval, provided that the number of securities issuable under such Compensation Arrangement and the number of securities issuable pursuant to the acquisition (including any related Compensation Arrangement) does not exceed 2% and 25% of the number of issued and outstanding securities of the listed issuer, respectively.
Continue Reading