Canada: Toronto Stock Exchange Announces Amendments To The Company Manual

The Toronto Stock Exchange (TSX) recently announced the approval of certain amendments (the Amendments) to the TSX Company Manual (the Company Manual) pertaining to Non-Corporate Issuers (including ETPs, Closed-end Funds and Structured Products, each as defined below). The Amendments, which became effective on September 17, 2015, include the addition to the Company Manual of "Part XI – Requirements Applicable to Non-Corporate Issuers" and certain ancillary amendments to Parts I and VII of the Company Manual. The following changes to the Company Manual will be of particular interest to participants in the investment funds and asset management industries:

(a) New definitions describing the new listing categories

"Closed-end Fund" has the same meaning as "non-redeemable investment fund" as found in the Securities Act (Ontario).

"ETP" (Exchange-Traded Products) means redeemable equity securities (an Exchange-Traded Fund or ETF) or debt securities (an Exchange-Traded Note or ETN) offered on a continuous basis under a prospectus which gives an investor exposure to the performance of specific indices, sectors, managed portfolios or commodities through a single security.

"Structured Products" means securities generally issued by a Financial Institution (or similar entity) under a base shelf prospectus and pricing supplement where an investor's return is contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows. Structured Products include securities such as non-convertible notes, principal or capital protected notes, index or equity linked notes, tracker certificates and barrier certificates.

The TSX has also reserved the discretion to determine if an issuer or securities of an issuer, as applicable, will be considered an ETP, Closed-End Fund or Structured Product.

(b) New listing category for "Non-Corporate Issuers"

This new category includes ETPs, Closed-end Funds and Structured Products. The Amendments do not have retroactive effect, as such a Non-Corporate Issuer listed before September 17, 2015 will continue to be listed in the category under which such issuer was originally listed.

(c) Minimum original offering size (market capitalization) and minimum distribution requirements

ETPs Closed-end Funds Structured Products
Minimum Offering Size Minimum Distribution Minimum Offering Size Minimum Distribution Minimum Offering Size Minimum Distribution
$1 million - $10 million 1 million freely tradable securities (at least 300 public board lot holders) $1 million -

(d) Management requirements in respect of ETPs, Closed-end Funds and Structured Products or their managers

ETPs(1),(2) Closed-end Funds(2) Structured Products(1),(2)
Chief Executive Officer
Chief Financial Officer
Independent Review Committee
Chief Executive Officer
Chief Financial Officer
Independent Review Committee
Chief Executive Officer
Chief Financial Officer
Two independent directors

(e) NAV calculation requirements

ETPs Closed-end Funds Structured Products
Calculated Reported Calculated Reported Calculated Reported
Each trading day Each trading day, on publicly accessible website No less frequently than required by securities law Each day on which NAV is calculated, on publicly accessible website No less frequently than weekly Each day on which NAV is calculated, on publicly accessible website

(f) Ongoing listing requirements

Securities of Closed-end Funds may be suspended or delisted if: (i) the market value of the fund's securities listed on the TSX is less than $3 million over any period of 30 consecutive trading days, (ii) the number of freely-tradable, publicly held securities is less than 500,000 or (iii) the number of public security holders, each holding one board lot or more, is less than 150.

Securities of an ETP or Structured Product may be suspended or delisted if, in the opinion of the TSX, the continued listing of such securities would not be consistent with preserving the overall quality of the market. See the full text of the Amendments for a list of factors that the TSX will consider in making this determination.

(g) Issuance of securities

ETPs must notify the TSX immediately of the issuance or potential issuance of any new class of securities which are convertible into a listed class of securities of the fund.

Closed-end Funds and Structured Products must notify the TSX immediately, and obtain pre-approval from the TSX in connection with any issuance or potential issuance of securities (other than securities which are unlisted, non-voting and non-participating).

(h) Additional listing requirements for new securities

ETPs Closed-end Funds Structured Products
TSX approval required? TSX approval required? TSX approval required?
No, but creation and issuance must comply with the provisions of National Instrument 81-102 – Investment Funds and the fund must provide, (i) on a monthly basis, a Form 1 – Change in Outstanding and Reserved Securities and (ii) on a quarterly basis, either (A) an opinion of counsel that all securities issued during the previous quarter have been validly issued as fully-paid and non-assessable or (B) a certificate of a senior officer confirming the number of securities of the fund created and reported to the TSX in the previous quarter and that full consideration for such securities was received prior to or concurrently with the issuance of such securities. Yes. Any public disclosure regarding the additional listing of securities of a fund must disclose that such transaction is subject to approval/acceptance by the TSX.

Yes. Any public disclosure regarding the additional listing of securities of a fund must disclose that such transaction is subject to approval/acceptance by the TSX.

(i) Supplemental listings

The Amendments introduced the following minimum distribution and market value thresholds in connection with supplemental listings where the securities to be issued are convertible into a currently listed class of the fund.

ETPs Closed-end Funds Structured Products
Minimum Distribution Minimum Market Value Minimum Distribution Minimum Market Value Minimum Distribution Minimum Market Value
Not less than the minimum prescribed number of securities determined by the manager of the fund - 100,000 publicly held securities (at least 100 public board lot holders)

$2 million

100,000 publicly held securities (at least 100 public board lot holders) $2 million

If the securities are not convertible into a currently listed class the original listing requirements will apply.

(j) Notice of termination

An ETP, Closed-end Fund or Structured Product must provide security holders with at least 30 days' notice prior to the fund's termination.

(k) Security holder approval

The TSX may require security holder approval in connection with any amendments to the constating documents of the fund that are not covered by the amendment provisions set forth in such constating documents and which may materially affect the rights of a security holder of the fund as well as in connection with the extension of an ETP or Closed-end Fund beyond the originally contemplated termination date.

(l) Preclearance of materials

ETPs, Closed-end Funds and Structured Products must pre-clear any information circulars and other materials relating to corporate actions, which are to be sent to security holders of the fund, at least five business days in advance of the finalization of such materials.


(1) Other than those issued by Financial Institutions (as defined in the Company Manual).

(2) Management responsible for day-to-day operations of the fund must meet the requirements of Section 325 of the Company Manual.

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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