Canada: Voluntary Delisting And Deference: TSX Proposes Changes To The Company Manual

Last Updated: January 28 2015
Article by Scott Kuehn

On January 22, 2015, the Toronto Stock Exchange ("TSX" or the "Exchange") published two proposed public interest amendments to the TSX Company Manual (the "Manual") for public comment. The first proposed amendment is a change to section 720 of the Manual that adds a number of requirements for listed issuers seeking to voluntarily delist (the "Delisting Amendments").1 The Delisting Amendments should be of interest to issuers who are considering a voluntary delisting application, particularly those issuers who are not planning to list in another market or to undertake a going private transaction or similar near term liquidity event.

The second amendment is a series of changes, primarily to Parts IV and VI of the Manual that establish a formal set of rules governing when the TSX will defer to the policies and practices of other exchanges in respect of issuers listed on more than one exchange (the "Deference Amendments").2 The Deference Amendments should be of interest to issuers who are listed on more than one exchange with less than 25% of their securities trading within Canada, and will potentially reduce current overlapping exchange obligations for such issuers.

Delisting Amendments

The TSX's proposed amendments to section 720 of the Manual aim to ensure that all security holders are treated fairly when an issuer voluntarily delists. Under the present rules, an issuer can delist without first seeking security holder approval. While the Exchange has noted such outcomes are rare, this has occasionally resulted in security holders being deprived of a fair and orderly market for their securities if the issuer does not list on another exchange or go through a near term liquidity event, such as a going private transaction. Without liquidity, the TSX is concerned that such security holders may become vulnerable to predatory take-over bids, management buy-outs or other similar transactions.

To avoid these outcomes, the TSX's proposed amendments will require an issuer to seek the approval of a majority of the holders of the affected class or series of securities as a precondition for voluntary delisting, unless the issuer can satisfy the Exchange that:

  1. an acceptable alternative market exists or will exist for the listed securities on or about the proposed delisting date;
  2. there will be a near term liquidity event, such as a going private transaction, and all of the material conditions of the transaction have been satisfied and the likelihood of non-completion is remote;
  3. the listed issuer is under delisting review for failure to comply with TSX policies and it is unlikely that the TSX will be satisfied that the issuer will cure these deficiencies within the prescribed time; or
  4. in the case of listed securities other than shares, if the listed securities are convertible, exercisable or exchangeable at the holder's option into another class of listed securities.

In order to minimize the additional costs and regulatory burden of complying with the proposed amendments, the TSX proposes to allow issuers to use the procedure in Subsection 604(d) of the Manual to obtain approval for a delisting application, whereby the issuer could satisfy the approval requirements by obtaining written approval of a majority of the security holders of the affected class or series, without needing to hold a formal meeting. However, the Exchange has also proposed that certain security holders will be excluded from voting, including insiders who have an interest that materially differs from other security holders or any security holder that holds more than 50% of the issued securities of the affected class or series.

The proposed voluntary delisting process requires the issuer to apply to the Exchange by letter, outlining: (a) the reasons for the application; (b) whether security holder approval will be sought, and if not, why; and (c) the proposed date of delisting. However, in addition to a certified copy of a directors' resolution authorizing the application to delist, the proposed amendments will require an issuer to provide a draft copy of a press release to be pre-cleared by the Exchange. The Exchange's goal with this new requirement is to improve the consistency of information about the voluntary delisting that is generally available to the market.

Deference Amendments

The Deference Amendments aim to align TSX practices with those of other major exchanges, the majority of which have formalized rules and frameworks for exempting issuers who are listed on two or more exchanges or marketplaces ("interlisted issuers") from certain exchange requirements. The TSX currently exempts interlisted issuers from certain requirements pursuant to section 602(g) of the Manual. The Deference Amendments are an incremental change to these exemptions, amending Parts IV and VI of the Manual and making ancillary changes to Parts I and III.

The Deference Amendments propose to create two types of exemptions: (a) transaction exemptions; and (b) corporate governance exemptions. These exemptions will only be available to interlisted issuers that meet the eligibility criteria set out in the proposed amendments. In proposing these changes, the TSX is recognizing that corporate statutes and market requirements in other jurisdictions or markets address similar policy objectives to those in Canada, and warrant greater deference to reduce the regulatory burden of certain interlisted issuers. The proposed changes aim to reduce this burden and create a transparent set of rules for obtaining interlisted issuer exemptions while ensuring the exemptions do not compromise the quality of TSX's marketplace.

Eligibility Criteria

To be eligible for either exemption, the interlisted issuer must: (a) be listed on a "Recognized Exchange; and (b) have had less than 25% of the overall trading volume of their listed securities occurring on all Canadian marketplaces in the 12 months preceding the application (an "Eligible Interlisted Issuer"). The amendments define a "Recognized Exchange" as including the major international exchanges (NYSE, NYSE MKT, NASDAQ, AIM, LSE, ASX, and HKSE) and others as determined by the Exchange from time to time.

To be eligible for the corporate governance exemptions, the interlisted issuer must be an Eligible Interlisted Issuer and be incorporated or organized in a "Recognized Jurisdiction" (an "Eligible International Interlisted Issuer"). The amendments define "Recognized Jurisdiction" as including Australia, England and the State of Delaware and other jurisdictions with corporate statutes substantially modelled after these jurisdictions.

Transaction Exemptions

Section 602(g) of the Manual already contains certain transaction exemptions for Eligible Interlisted Issuers. In addition to these existing transaction exemptions, the Deference Amendments will also add exemptions for Eligible Interlisted Issuers from the following requirements:

  1. special requirements for non-exempt issuers (s. 501);
  2. prospectus offerings (s. 606);
  3. convertible securities (s. 610);
  4. securities issued to registered charities (s. 612); and
  5. rights offerings (s. 614).

To obtain these exemptions, an Eligible Interlisted Issuer must notify the Exchange using the form of notice under section 602(e), and must include: (a) a notification that the issuer is relying upon a transaction exemption; (b) the Recognized Exchange(s) on which the issuer is listed; and (c) evidence that the volume of trading on all Canadian marketplaces in the 12 months before the application was less than 25%. The Exchange will then confirm acceptance, conditional upon evidence that the transaction has been accepted by a Recognized Exchange or confirmation from legal counsel in the local jurisdiction that the proposed transaction is in compliance with applicable rules. The issuer must also disclose that it intends to or has relied on the exemption in section 602.1 of the Manual in all press releases issued in connection with the transaction.

Corporate Governance Exemptions

The Deference Amendments also propose a new exemption from certain corporate governance requirements in the Manual. Under the proposed amendments, Eligible International Interlisted Issuers could apply to be exempt from the following corporate governance requirements:

  1. Director Election Requirements (ss. 461.1-461.4); and
  2. Annual Meeting (s. 464).

The proposed process for obtaining a corporate governance exemption is slightly different than the process for obtaining a transaction exemption. Instead of the notice procedure under section 602(e), an Eligible International Interlisted Issuer wishing to obtain a corporate governance exemption must apply to the TSX by letter with evidence that it meets the Eligible International Interlisted Issuer criteria. In addition, the issuer must disclose that it has been exempted for the year from the corporate governance requirements and the issuer's reliance on the section 401.1 exemption in its press release issued in connection with the issuer's annual meeting or proxy circular.

The amendments also allow other International Interlisted Issuers that are outside of a "Recognized Jurisdiction" (i.e. not an Eligible International Interlisted Issuer) to apply to the TSX for discretionary relief on an annual basis from these corporate governance requirements. However, Canadian interlisted issuers cannot apply for a discretionary exemption from these corporate governance requirements.

Comment Period

The Delisting Amendments are open for comment for a period of 30 days, which expires on February 23, 2015. The Exchange is seeking comments regarding the appropriateness of the amendment in general, and the appropriateness of specific procedures for obtaining security holder approval.

The Deference Amendments are open for comment for a period of 45 days, which expires on March 9, 2015. The Exchange is requesting comments on the general appropriateness of the Deference Amendments, the appropriateness of the proposed trading threshold, the appropriateness of the types of transactions that should be exempt, the appropriateness of the definitions of recognized exchange and recognized jurisdiction, and whether there should be other requirements before the Exchange should defer to another exchange or jurisdiction.

1 Toronto Stock Exchange, Amendments to Toronto Stock Exchange Company Manual (January 22, 2015) [Section 720].

2 Toronto Stock Exchange, Amendments to Toronto Stock Exchange Company Manual (January 22, 2015) [Deference Amendments].

Please contact the author listed below or a member of our Capital Markets Group if you have any questions or require assistance with the preparation of a comment letter.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2015

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.

Scott Kuehn
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Related Articles
Related Video
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