TSX staff remind issuers that the requirements to notify the TSX
of the approval of a distribution and to provide seven trading days
notice prior to the record date includes special year-end
distributions and applies whether or not
the exact amount of distribution is known,
the distribution is to be made in cash, units or other
an immediate consolidation to maintain the current number of
outstanding securities is planned.
TSX staff also remind issuers of the additional requirements
that apply in the case of distributions to be followed by
consolidations. For distributions that are not entirely in cash,
the notices should be filed with the appropriate Listed Issuer
Services Manager, as well as the TSX Dividend Administrator.
TSX staff generally consider the issuance of a special share
that provides the holder with rights that differ from those
attached to the issuer's general body of equity securities
(e.g., board appointment rights, management appointment and removal
rights, or veto rights over corporate decisions) to be a limitation
on the voting rights of the equity securities. Accordingly, the
TSX's restricted securities policy would not permit the word
"common" to be used in a legal designation of the
issuer's equity securities and would require a restricted
security term, such as 'limited voting' or 'restricted
voting' to be used.
TSX staff have received a number of applications for exemptions
from this rule, including in connection with income trust
conversions. They may consider granting such an exemption where the
special share confers appointment rights that are proportionate to,
and correlated with, the holder's equity interest in the
issuer. In addition, where the holder of the special share also
holds equity securities, the TSX expects that the holder will be
permitted to exercise either, but not both, of its rights under the
special share or its equity securities. The TSX may also require
additional disclosure of these rights and will consider other
rights attached to the special share in determining whether to
grant an exemption. The TSX will also consider whether the equity
securities should explicitly contain take-over bid protections,
such as coattails.
TSX staff also remind issuers to consider the application
of Ontario Securities Commission Rule 56-501 Restricted
Shares to determine whether similar relief would be required
under that rule. National Instrument 51-102 Continuous
Disclosure Obligations and National Instrument 41-101
General Prospectus Requirements also contain specific
provisions for issuers that have outstanding restricted
Option plan amendments
The federal government has announced significant changes to the
provisions of the Income Tax Act affecting stock options
that are expected to become effective retroactively to March 4,
2010 or to January 1, 2011. For details of these changes, please
see our Tax Law Bulletin Budget 2010 Stock Option Changes may Necessitate Action by
The TSX will generally consider amendments to option plans and
agreements that respond to these tax changes to be of a
"housekeeping" nature. Accordingly, such amendments may
be made without security holder approval, provided that they are
reviewed and pre-cleared by the TSX and disclosed to shareholders.
The TSX will also permit such amendments to be made even where the
existing option plan and agreements do not provide a mechanism for
the changes. However, in these circumstances, the TSX will require
the issuer to introduce proper amendment procedures in the plan, to
be approved by the security holders at the next meeting.
The TSX guidance is provided in TSX Staff Notice 2010–0002,
dated November 12, 2010, which is available on the TSX website by
following the above link.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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