Canada: Toronto Stock Exchange And TSX Venture Exchange Seek Public Comment In Ongoing Review Of Emerging Market Issuers

On December 17, 2012, the Toronto Stock Exchange (the "TSX") and TSX Venture Exchange ("TSXV" and together with the TSX, the "Exchanges") published a joint Consultation Paper on companies with a significant connection to an emerging market jurisdiction ("Emerging Market Issuers"). The Consultation Paper summarizes the findings of a broad review of the issues and considerations applicable to listing Emerging Market Issuers and solicits feedback on possible requirements and procedures for Emerging Market Issuers to be adopted by the Exchanges.

Areas of Risk Identified by the Exchanges

In the course of its review, the Exchanges identified four areas relevant to the listing of securities with greater risk potential for Emerging Market Issuers as compared to other reporting issuers. These areas are: (i) management and corporate governance; (ii) financial reporting; (iii) non-traditional corporate/capital structures; and (iv) legal matters relating to title and ability to conduct operations.

The Exchanges are seeking feedback on a broad range of issues concerning listings by Emerging Market Issuers. Examples of the specific questions on which the Exchanges are currently seeking feedback include:

1. whether independent directors of Emerging Market Issuers should be required to have certain specific attributes and experience;

2. whether the Exchanges should require an independent chair for all Emerging Market Issuers;

3. whether there are additional factors that are relevant to an individual's suitability as CFO, an audit committee member, or auditor for an Emerging Market Issuer other than those factors currently employed by the Exchanges;

4. whether an expanded view of "related party transactions" should be adopted to capture transactions where an Emerging Market Issuer appears to be engaging in non-arm's length transactions that do not meet the general definition for related party transactions; and

5. whether the Exchanges should refuse to list Emerging Market Issuers that have adopted nonconventional corporate structures; and

6. whether the Exchanges should require sponsorship for all Emerging Market Issuers.

Proposed TSXV Requirements and Procedures

The TSXV has also requested comments on proposed specific requirements and procedures applicable to Emerging Market Issuers seeking to list on the TSXV. These proposed requirements and procedures are intended to supplement the TSXV's existing policy requirements, including those governing initial listing requirements and processes, sponsorship requirements and matters relating to corporate governance.

While the proposed requirements and procedures are intended to apply principally in respect of new listings, the TSXV will require compliance on an ongoing basis.

The proposed requirements and procedures will apply, generally, to issuers whose principal business operations or operating assets are located in an Emerging Market Jurisdiction, which is defined as any jurisdiction outside of Canada, the United States, Western Europe, Australia and New Zealand. The proposed requirements and procedures will not apply to certain mining and energy issuers if the majority of such Issuer's directors and senior officers have not been residents in an Emerging Market Jurisdiction for the majority of the past ten years. Highlights of proposed requirements include the following:

1. Qualifications of Management and Corporate Governance. The CEO, CFO, and the board of directors of an Emerging Market Issuer must have adequate knowledge and experience with Canadian public company requirements, including Canadian securities laws and policies of the TSXV. To meet this requirement, the TSXV will look for recent experience as a director or officer of a TSXV or TSX- listed Issuer with a positive track record of compliance. In addition, senior officers and the board of directors must demonstrate that they have adequate industry and technical experience in the Emerging Market Jurisdiction in which the Issuer operates.

2. Communication. The Issuer must have senior officers and directors who are bilingual in either French and English and the primary language in the Emerging Market Jurisdiction in which the Issuer operates. The Issuer must also demonstrate how any language barriers within the Issuer's management team and between the Issuer's management team and its advisors will be overcome. If any document or agreement that is required to be filed with the TSXV is prepared in a language other than English or French, the Issuer must file a translation that has been prepared by a duly certified translator.

3. Requirements of the CFO. Emerging Market Issuers must demonstrate that the CFO has the capability to design and apply effective internal controls over financial reporting. At the time of listing, the Issuer must confirm with the TSXV the frequency with which it will be necessary for the CFO to travel to the Issuer's operation sites in order to fully exercise his or her mandate.

4. Requirements of the Audit Committee. Emerging Market Issuers must demonstrate that every member of the audit committee is financially literate and independent, and that at least one member of the committee has Canadian financial reporting skills and experience with audit engagements for public companies.

5. Independent Oversight of Related Party Transactions. In addition to fulfilling existing requirements, Emerging Market Issuers must adopt internal written policies regarding Related Party Transactions and transactions with Non-Arm's Length Parties that address matters such as independent director oversight and approval, adequate and timely disclosure, financial statement disclosure and compliance with applicable regulatory requirements.

6. Background and Corporate Searches. The TSXV may, at the expense of the Emerging Market Issuer, conduct corporate due diligence searches in any jurisdiction relevant to an Emerging Market Issuer.

7. Qualifications of Auditors. In general, auditors for an Emerging Market Issuer must be pre-cleared by the TSXV. The TSXV must be satisfied that the auditor has sufficient experience and expertise in the relevant jurisdiction.

8. Financial Reporting and Adequacy of Internal Controls. Auditors must review the interim period financial statements of all Emerging Market Issuers for the first two years after the listing. Auditors will also be required to review and evaluate the Issuer's internal controls over financial reporting prior to the listing. The Issuer's CEO and CFO must confirm to the TSXV in writing that the internal controls in place provide reasonable assurance regarding reliability of financial reporting. This confirmation must include a description of any material weakness identified in the internal controls, and any plans of the Issuer to remediate such material weaknesses.

9. Non-Traditional Corporate/Capital Structure. Where an Emerging Market Issuer intends to employ a non-traditional corporate structure or share capital structure, the Issuer must provide an explanation of why such structure is necessary. In the absence of a satisfactory explanation the TSXV may refuse the listing. Full, true and plain disclosure of the nature, material characteristics and associated risks of the corporate/capital structure must be disclosed in the Issuer's principal document at the time of listing, and in its subsequent annual filings.

10. Legal Matters Relating to Title and Ability to Conduct Operations. An Emerging Market Issuer must provide a satisfactory title opinion for principal properties or assets located outside of Canada or the United States. The Issuer must also provide a legal opinion confirming that the Issuer has all required permits, licenses and approvals to conduct business in the relevant jurisdiction.

12. Sponsorship Requirements. The proposed requirements and procedures restrict the availability of existing sponsorship exemptions for new listings from Emerging Market Issuers. The Exchange will continue, at its discretion, to request additional information about the Issuer from the Sponsor in the form of a Sponsorship Report.

Next Steps

Once comments are received on these matters, each of the TSX and the TSXV will assess whether to implement additional guidance or requirements for listing Emerging Market Issuers. If amendments are proposed to the TSX Company Manual, they will be subject to public comment and regulatory approval.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions