The Toronto Stock Exchange (the "TSX") has adopted and the Ontario Securities Commission has approved amendments (the "Amendments") to Parts I, III, IV, and VI of the TSX Company Manual (the "Manual"), which vary and enhance some exemptions available to issuers listed on two or more exchanges or marketplaces ("interlisted issuers"). The amendments permit increased deference by the TSX to other exchanges with respect to certain transactional and corporate governance requirements affecting interlisted issuers.
Previous Regime
Previously, the TSX granted some exemptions to interlisted issuers for specific transactions where i) 75% or more of the issuer's trading volume and value over the six months before notice of the transaction took place on "another exchange" and ii) the other exchange considered the transaction. Some interlisted issuers were also permitted to apply to the TSX for discretionary relief from specific corporate governance requirements.
Eligibility for the Exemptions
The Amendments now limit the eligibility for exemptions to issuers listed on a "Recognized Exchange" (not "another exchange") which includes: New York Stock Exchange, NYSE MKT, NASDAQ, London Stock Exchange Main Board, AIM, Australian Securities Exchange, Hong Kong Stock Exchange Main Board, and others determined by the TSX from time to time.
The conditions for exemptions were also restated, such that "Eligible Interlisted Issuers" are eligible for exemptions. An Eligible Interlisted Issuer is an interlisted issuer also listed on a Recognized Exchange that has traded less than 25% of its overall trading volume (not value) of listed securities on Canadian marketplaces in the 12 months preceding the application or notice.
Transactional Exemptions
Following the Amendments, Eligible Interlisted Issuers may apply for exemptions from the following requirements, with respect to specific transactions. As indicated in the table below, comparable exemptions were also available under the TSX Manual for certain types of transactions prior to the Amendments coming into effect.
| Pre-existing Exemptions | New Exemptions |
| Security holder approval | Special requirements for non-exempt issuers |
| Private placements | Prospectus offerings |
| Unlisted warrants | Convertible securities |
| Acquisitions | Securities issued to registered charities |
| Security based compensation arrangements | Rights offerings |
Eligible Interlisted Issuers must obtain the TSX's approval of a transaction by notifying the TSX and by complying with the formal requirements outlined in the Manual. The Manual further stipulates that, "As a condition of acceptance, TSX will require evidence that the Recognized Exchange or relevant regulator has accepted the transaction, or confirmation from qualified legal counsel in the local jurisdiction that the proposed transaction is in compliance with applicable rules of the other exchange or marketplace, as well as applicable laws."
Corporate Governance Exemptions
The Amendments also permit "Eligible International Interlisted Issuers" and other International Interlisted Issuers to apply for annual exemptions from corporate governance requirements, director election requirements and annual meetings. Eligible International Interlisted Issuers are Eligible Interlisted Issuers incorporated or organized in a Recognized Jurisdiction, which includes: Australia, England, Hong Kong, the State of Delaware, and other jurisdictions with corporate statutes substantially modelled after these jurisdictions, as the TSX may determine from time to time.
Interlisted issuers incorporated or based in Canada are not eligible for exemptions from the corporate governance requirements unless the TSX issues a discretionary waiver.
Effect of the Amendments
The Amendments are intended to alleviate some of the regulatory burden on interlisted investors while maintaining the integrity of the market. Eligible International Interlisted Issuers may be exempt from an increased number of transactional and corporate governance requirements and Canadian-based Eligible Interlisted Issuers may enjoy exemptions from transactional requirements in an increased number of transactions. The Amendments came into effect on September 10, 2015.
Co-written by Philippe Tardif and Laura Costen
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
