TSX Provides Guidance on Disclosure Requirements Where Security Holder Approval Required
The Toronto Stock Exchange (the “TSX”) published Staff Notice 2012-0003 (the “Notice”) dated September 28, 2012 which provides guidance with respect to disclosure and other related requirements where a transaction is subject to security holder approval pursuant to the TSX Company Manual (the “Manual”). The Notice provides that listed issuers must disclose the material terms of the transaction either in the circular that will be mailed to security holders or in the form of written consent.
The disclosure guidance provided below is also applicable to press releases disclosing material terms of a transaction where a listed issuer is:
(i) seeking security holder approval in writing;
(ii) relying on the financial hardship exemption under Subsection 604(e) of the Manual; or
(iii) using the 90% control block exemption under Subsection 604(f) of the Manual.
The disclosure included in the circular, form of written consent or press release, as applicable, should include:
- The principal terms of the transaction and the securities issuable such as the issue price, exercise or conversion price, interest rate, term, anti-dilution provisions, whether or not the transaction has been negotiated at arm’s length and any other material features of the securities and conditions of the transaction.
- If security approval is required under Subsection 501(c) of the Manual, the principal terms of the transaction.
- The maximum number of securities issuable under the transaction both as an absolute number together with the percentage such number represents of the listed issuer’s outstanding number of securities, pre-transaction, on a non-diluted basis..
- The effect, if any, the transaction may have on the control of the listed issuer. The identity of any new control person or entity must also be disclosed together with the number of securities held by such person or entity (taking into account all securities issuable to such person or entity) both on a pre- and post-transaction basis.
- The identity of any persons or entities who will hold more than 10% of the listed issuer’s outstanding securities post-transaction and the number of securities held by each such person or entity (taking into account all securities issuable to such person or entity) on a post-transaction basis.
- The material terms of any voting trust or similar agreement or arrangement to be entered into in connection with the transaction,
- If insiders of the listed issuer are participating in the transaction, the identity of such insiders, the nature of the relationship with the listed issuer (e.g., director, officer, control security holder) together with the number of securities issuable to each insider.
- The reasons why security holder approval is required under TSX rules.
- If security holder approval is required on a disinterested basis, it must be disclosed together with the identity of the security holders excluded from the vote and the number of securities held by such security holders (expressed both as an absolute number and as a percentage of the listed issuer’s outstanding voting securities as at the date of the circular or form of written consent).
- If security holder approval is being sought by way of written consent, it must be disclosed in the news release issued in connection with the transaction.
- If the financial hardship exemption in Subsection 604(e) of the Manual is being relied on, the press release must include the specific disclosure that is required under Subsections 604(e) (i), (ii), (iii) and (iv) of the Manual.
- All other information deemed necessary by the TSX to ensure that security holders have sufficient information to make an informed decision with respect to whether to approve the transaction and to ensure that the principal terms of the transaction are available to market participants.
If the TSX requires security holder approval or exempts an issuer from security holder approval, all related disclosure, whether in a circular, form of written consent or press release, must be pre-cleared and approved by the TSX. Listed issuers and their advisors must provide a draft of a circular to TSX for review at least five business days in advance of finalization of the circular. Press releases and forms of written consent related to security holder approval or exemptions should be provided to the TSX for review at least two business days in advance of expected dissemination. Listed issuers are reminded that press releases required in connection with security holder approval by written consent or security holder approval exemptions must be issued at least five business days in advance of closing of the transaction. The TSX will generally conditionally approve the transaction five business days after the issuance of such press release provided that it is then in a position to accept notice of the transaction.
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