The Toronto Stock Exchange (TSX) has published two proposed
amendments. The first will expand exemptions available to issuers
who list not only on the TSX but on one or more exchanges
("Interlisted Issuers"). The second will
vary the requirements and procedures for issuers seeking to
The TSX has asked for comments on the proposed Interlisted
Issuer amendments by March 9, 2015, and on the proposed voluntary
delisting process amendment by February 23, 2015.
Interlisted Issuer Amendments
The rules concerning Interlisted Issuers are designed to
eliminate unnecessary duplication. Specifically, there is limited
advantage and potentially unnecessary burdensome complexity and
duplication in imposing an additional regulatory framework on
issuers whose securities are primarily traded on other exchanges,
and whose activities are being regulated and overseen by those
There is a meaningful number of Interlisted Issuers: the TSX
reported that as at November 30, 2014, there were 332. That group
subdivides in two ways: jurisdiction of incorporation, and location
of the bulk of trading in their securities:
The substantial majority of
Interlisted Issuers (273 or 82%) are incorporated in Canada
("Canadian-based Interlisted Issuers"),
while the remaining 59 (or 18%) are foreign incorporated
In 2013, 56 (22%) of the
Canadian-based Interlisted Issuers and 37 (46%) of the
International Interlisted Issuers, had less than 25% of their
trading volume on the TSX.
The TSX's current rules exempt Interlisted Issuers from
certain of the exchange's requirements, including those
applicable to private placements and acquisitions, where at least
75% of the issuer's trading value and volume over the six
months immediately preceding notification occurs on another
exchange (provided that the other exchange is reviewing the
transaction in question).
The proposed amendments would expand the scope of the
exemptions, and the number of Interlisted Issuers who could rely on
them. Under those amendments (provided that another recognized
exchange is reviewing the transaction), Interlisted Issuers for
which less than 25% of trading in their securities occurs in
Canada, could use the exemption (without, as presently is the case,
necessarily requiring that more than 75% of trading occur on one
other exchange). As for the scope of the exempt transactions, and
in addition to the current exemptions, qualifying Interlisted
Issuers would be exempted from TSX rules concerning the following
matters, among others:
special requirements for non-exempt
securities issued to registered
Additionally, International Interlisted Issuers could apply for
an annual exemption from the TSX's corporate governance
requirements, such as director election requirements.
Voluntary Delisting Amendments
The proposed new rules for issuers seeking to voluntarily delist
contemplate enhanced requirements, generally including security
holder approval unless the TSX is satisfied that: (a) an acceptable
alternative market exists for the listed securities; (b) security
holders have a near-term liquidity event; or (c) the listed issuer
is already under delisting review.
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.
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