Canada: TSX Implements Rule Changes To Benefit Interlisted Issuers

INTRODUCTION

The Toronto Stock Exchange (TSX) has implemented amendments (Amendments) to its Company Manual to modify and expand the exemptions available to TSX issuers listed on one or more other exchanges (interlisted issuers) where the primary market is an exchange other than the TSX. The Amendments came into effect on September 10, 2015.

The TSX will defer to the regulatory authority of specified exchanges or jurisdictions for an expanded number of transactions and corporate governance issues. The purpose of the Amendments is to alleviate the regulatory burden on eligible interlisted issuers (defined below) and to facilitate foreign issuer listings on the TSX.

HISTORICAL EXEMPTIONS

Previously, the TSX granted exemptions to interlisted issuers from rules relating to security holder approval, private placements, unlisted warrants, acquisitions and security-based compensation arrangements (e.g. option and performance right plans). Certain interlisted issuers could also apply to the TSX for relief from corporate governance requirements on a discretionary basis.

RATIONALE FOR THE AMENDMENTS

The number of issuers that are interlisted on the TSX and one or more international exchanges has grown significantly (as of November 20, 2015, interlisted issuers totalled 338) and the TSX expects this trend to continue. Further, the TSX recognizes that, despite the differing corporate statutes and market requirements of each jurisdiction and exchange, the TSX's policy objectives may, in certain cases, be achieved through compliance with the policies of another exchange or jurisdiction.

The TSX implemented the Amendments to reduce unnecessary duplication through the introduction of a broader deference model in instances where other jurisdictions have appropriate corporate statutes and market requirements. The Amendments are an incremental change to the exemptions that were already available, but provide increased transparency as to when the TSX will defer to other exchanges and jurisdictions.

HOW DO INTERLISTED ISSUERS QUALIFY FOR EXEMPTIONS?

The Amendments specify that the transaction and corporate governance exemptions are available to issuers interlisted on the New York Stock Exchange, NYSE MKT, NASDAQ, London Stock Exchange Main Board, AIM, Australian Securities Exchange, Hong Kong Stock Exchange Main Board and any other exchange that the TSX may approve from time to time (each, a Recognized Exchange).

In addition, the transaction and corporate governance exemptions will only apply to interlisted issuers on a Recognized Exchange that had less than 25 per cent of their trading volume on Canadian marketplaces in the last 12 months (Eligible Interlisted Issuer). Prior to the Amendments, the exemptions were available if an interlisted issuer had at least 75 per cent of its trading volume and value over the last six months on an exchange other than the TSX and the other exchange was reviewing the transaction.

The transaction exemptions are available to Eligible Interlisted Issuers that are incorporated or organized in Canada and in foreign jurisdictions. In its request for comments dated January 22, 2015, the TSX provided illustrative scenarios of how the Amendments would apply. In one scenario, the TSX explained that a Canadian-based Eligible Interlisted Issuer could rely on the rules of another exchange to complete a transaction, provided that such other exchange has not exempted the issuer from its rules. An Eligible Interlisted Issuer must therefore be subject to the rules of another jurisdiction in order to be eligible for a transaction exemption from the TSX.

The corporate governance exemptions are only available to Eligible Interlisted Issuers that are incorporated or organized in Australia, England, Hong Kong, the State of Delaware, a jurisdiction with a substantially similar corporate statute to these jurisdictions or any other jurisdiction that the TSX may approve from time to time (each, a Recognized Jurisdiction). The corporate governance exemptions will not be available to Canadian-based interlisted issuers unless the TSX grants a discretionary exemption.

NEW EXEMPTION REGIME

The Amendments expand the scope of the exemptions to the TSX rules available to Eligible Interlisted Issuers, as follows:

Transaction exemptions: subject to prior approval from the TSX and provided that a transaction is completed in accordance with the requirements of a Recognized Exchange, an Eligible Interlisted Issuer is exempt from the TSX rules regarding special requirements for non-exempt issuers, security holder approval, prospectus offerings, private placements, unlisted warrants, convertible securities, acquisitions, securities issued to registered charities, security-based compensation arrangements and rights offerings

Corporate governance exemptions: subject to prior approval from the TSX, an Eligible Interlisted Issuer from a Recognized Jurisdiction is exempt from the TSX corporate governance rules, including director election requirements and annual meetings

An Eligible Interlisted Issuer that wishes to rely on a transaction exemption must apply to the TSX for approval and provide evidence that the transaction has been approved by its primary exchange or regulator or provide confirmation from legal counsel that the transaction is legally compliant with the laws of its primary jurisdiction. Reliance on the transaction exemption must also be disclosed in a news release issued in connection with the transaction.

An Eligible Interlisted Issuer from a Recognized Jurisdiction that wishes to rely on a corporate governance exemption must apply to the TSX for approval and upon acceptance, must send confirmation to the TSX on an annual basis that it will continue to rely on the exemption.

DISCRETIONARY EXEMPTIONS FROM CORPORATE GOVERNANCE RULES

If an interlisted issuer is not incorporated or organized in a Recognized Jurisdiction, is not listed on a Recognized Exchange, or does not meet the necessary trading thresholds, it can apply to the TSX for a discretionary exemption from the corporate governance rules on an annual basis. In determining whether to grant a discretionary exemption, the TSX will consider the issuer's level of activity in Canadian markets and whether the corporate governance framework of the issuer's primary market achieves the same policy objectives as the Canadian corporate governance regime.

Canadian-based interlisted issuers can also apply to the TSX for a discretionary exemption from the corporate governance rules. However, the TSX does not generally believe it is appropriate to grant such exemptions to Canadian-based interlisted issuers, as the stated purpose of the TSX's director election requirements is to align Canadian corporate governance practices with those of its international peers.

IMPACT ON FOREIGN ISSUER LISTINGS IN CANADA

The Amendments will exempt a number of foreign interlisted issuers from the transaction and corporate governance rules in the TSX Company Manual and reduce more of the regulatory burden associated with a dual listing on the TSX. By deferring to one set of exchange requirements, the Amendments will allow for a more efficient transaction process and resolve potential irreconcilable conflicts between the requirements of different jurisdictions and exchanges. While foreign interlisted issuers are still subject to Canadian securities laws, the Amendments reduce the complexity and cost of compliance with multiple exchange rules and should make it easier for foreign interlisted issuers to undertake or maintain listings on the TSX.

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.

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

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

Authors
Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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