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On April 20, 2017, the Canadian Securities Administrators (CSA) released Staff Notice 45-323 (Notice). The Notice provided an update on the use of the rights offering exemption available to reporting issuers (Exemption) under section 2.1 of National Instrument 45-106 Prospectus Exemptions, as of December 31, 2016, approximately one year after it was adopted in its current form.

A rights offering is intended to allow reporting issuers to raise capital, while providing an opportunity for existing security holders to protect themselves from dilution by participating in the offering on the basis of their proportional interest. In its original form, prospectus-exempt rights offerings were underutilized, as the excessive time and costs associated with such offerings made them an unappealing option for issuers. On December 8, 2015, in an effort to encourage greater use of prospectus-exempt rights offerings, the Exemption was amended to require simplified plain-language offering materials, often using a question and answer format, and allowing for an increased dilution limit of 100%.

In the Notice, the CSA noted that in the first year of the amended Exemption, the time required to complete a rights offering was reduced from approximately 85 days to approximately 38 days. It is therefore not surprising that a total of 30 rights offerings were completed across all industries, raising approximately $247.6 million – a marked increase from the past average of 13 rights offerings per year. In these 30 rights offerings, an average of 39% of the outstanding securities of a certain class were issued and 48% of the amounts being raised were from insiders who often acted as stand-by guarantors.


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In late May 2016, the TSX proposed amendments to the TSX Company Manual (Initial Proposal), most notably in Part IV, which contains the requirements for maintaining a listing. In our earlier post, we provided an overview of the Initial Proposal, which was to introduce a requirement for certain corporate documents to be disclosed, and publicly accessible, on a listed issuer’s website. In the Initial Proposal, the TSX pointed out that while many relevant corporate documents are already publicly available (typically on SEDAR), they are often difficult to find and categorize.

At the conclusion of the initial comment period, the TSX identified concerns from market participants regarding the potential increased regulatory burden and the general uncertainty surrounding the types of documents that fall within the scope of the Initial Proposal. As a result, the proposed amendments were revised (Revised Proposal) and the TSX has issued a further request for comments, to be completed by May 8, 2017. While the rationale of providing participants with easy centralized access to key information remains unchanged, the Revised Proposal attempts to remedy the potential regulatory burden and clarity issues of the Initial Proposal.

The Initial Proposal created ambiguity by providing for broad categories of documents, with short non-exhaustive lists as guidance, that an issuer would be required to post online. For example, an issuer was required to post “constating documents including articles, trust indentures, partnership agreements, by-laws and other similar documents” and “corporate policies that may impact meetings of security holders and voting, including advance notice and majority voting policies.” The Revised Proposal attempts to address the ambiguity by providing specific lists (for example, “articles of incorporation, amalgamation, continuation…”) and in some cases, a catch-all for documents of a similar nature.


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