An issuer seeking to voluntarily delist its securities from the
Toronto Stock Exchange (TSX) is now faced with new rules aimed at
providing protection to its security holders, which may require
security holder approval to proceed with the delisting. On April
30, 2015, the Ontario Securities Commission announced that
amendments by the TSX to section 720 of the TSX Company Manual had
been approved and became effective that day. These amendments were
originally published for comment in a request for comments on
January 22, 2015.
Section 720 of the TSX Company Manual concerns the voluntary
delisting of an issuer. The amendments to section 720 require an
issuer applying for a voluntary delisting to submit with its
application: (a) a resolution of the issuer's board of
directors approving the delisting application; and (b) a draft copy
of the press release announcing the voluntary delisting and the
details relating thereto. The amendments also require issuers to
obtain the approval of the holders of an affected class or series
of securities for a voluntary delisting application for the
principal equity class or classes of a listed issuer's
securities. The TSX may waive the requirement for security holder
approval if it is satisfied that:
an acceptable alternative market exists or will exist for the
listed securities on or about the proposed delisting date;
security holders have a near term liquidity event, such as a
going private transaction, for which all material conditions have
been satisfied and the likelihood of non-completion is remote;
the listed issuer is under delisting review and it is unlikely
that the TSX will be satisfied that the deficiencies will be cured
within the prescribed period.
Any insider whose interest differs materially from other
security holders will be ineligible to vote and any security holder
that controls 50 percent or more of the affected class or series of
securities will generally be ineligible to vote.
Where security holder approval is required, a draft copy of the
information circular or form of written consent used to obtain
security holder approval must be submitted to the TSX for
pre-clearance at least five business days prior to finalization.
The proposed delisting date cannot be earlier than the tenth
business day following the later of (a) the dissemination of the
press release announcing the voluntary delisting; and (b) the date
the issuer obtains security holder approval.
The amendments to section 720 bring the TSX's voluntary
delisting requirements in line with the requirements on other
Canadian stock exchanges, and are a step forward in protecting the
investing public. However, additional protection for security
holders could result in increased costs to and additional
regulatory burden on an issuer. Nevertheless, the TSX believes the
amendments are beneficial to the market as a whole.
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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