Originally published in Blakes Bulletin on Securities
Regulation, August 2011
The TSX has amended certain provisions of the TSX Company Manual
introduce a new subcategory of minimum listing requirements for
oil and gas development stage companies
provide for aggregation of transactions involving insiders or
related parties over a six- or 12-month period, as applicable
permit conditional rights offerings
Further to a public request for comments issued on February 4,
2011, the Toronto Stock Exchange (TSX) has published amendments to
the TSX Company Manual (Manual) relating to
original listing requirements, aggregation of insider and related
party transactions, and rights offerings. The following is a
summary of the changes represented by the amendments.
Original Listing Requirements
Section 319 of the Manual has been amended to introduce a new
subcategory of minimum listing requirements for oil and gas
development stage companies. Pursuant to the amendments, companies
with contingent resources of at least C$500-million, a minimum
market value of securities to be listed of C$200-million and which
otherwise satisfy the requirements of section 319 –
being, generally, a clearly defined development plan, adequate
funds to carry out the plan and an adequate capital structure
– may satisfy the listing requirements of the TSX,
subject to the exercise of the discretionary authority of the
Applicants applying under this new listing category are strongly
encouraged to consult with the TSX prior to making an application
as the subcategory is generally intended to apply only to
unconventional oil and gas assets, such as oil sands.
The amendments to section 319 came into effect on July 29,
Aggregation of Transactions
Subsections 501(c), 604(a)(ii) and 611(b) of the Manual, which
deal with transactions involving insiders and related parties, have
been amended to aggregate transactions during any six-month period.
The amendments have the potential to increase the number of
transactions for which the board must establish a valuation through
a third-party report or obtain security holder approval, depending
upon the circumstances.
The amendments generally affect the following types of
transactions involving insiders or other related parties of a
non-exempt issuer and which:
do not involve an issuance or potential issuance of listed
that are initiated or undertaken by the non-exempt issuer and
materially affect control;
transactions involving insiders and other related parties of
non-exempt issuers where the value of the consideration to be
received by the insider or other related party exceeds 10% of the
market capitalization of the issuer;
transactions providing consideration to insiders in aggregate
of 10% or greater of the market capitalization of the listed issuer
and that has not been negotiated at arm's length; and
transactions where securities issued or issuable to insiders as
a group in payment of the purchase price for an acquisition exceeds
10% of the number of securities of the listed issuer which are
outstanding on a non-diluted basis, prior to the date of closing of
Exemption for Employment Inducements
Security holder approval is not required for
security‑based compensation arrangements used as an
inducement to persons or companies not previously employed by and
not previously an insider of the listed issuer, provided that:
such persons or companies enter into a contract of full-time
employment as an officer of the listed issuer; and
the number of securities made issuable pursuant to section
613(c) during any 12-month period do not exceed in aggregate 2% of
the number of securities of the listed issuer which are
outstanding, on a non-diluted basis, prior to the date this
exemption is first used during such 12-month period.
As previously drafted, section 613(c) considered issuances of
securities to a particular person or company to induce them to
accept employment as an officer. As amended, section 613(c) has the
effect of aggregating all such issuances to all such persons or
companies within any 12-month period.
The amendments to sections 501(c), 604(a)(ii) and 611(b) come
into effect on August 29, 2011 and will have no retroactive
The TSX has removed section 614(n)(v) from the Manual such that
rights offerings relating to TSX‑listed securities may be
made on a conditional basis. Previously, a rights offering was
required to be made on an unconditional basis.
This amendment to section 614(n)(v) comes into effect on August
29, 2011 and will have no retroactive effect.
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.
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