Further to the new rights offering regime adopted by the
Canadian Securities Administrators that came into force on December
8, 2015 (see our e-Lert of December 8, 2015), the
Toronto Stock Exchange (TSX) has published its new guidance with
respect to Section 614 - Rights Offerings of the TSX
Company Manual (the Manual). The TSX Venture Exchange (TSXV) has
also published a Corporate Finance Bulletin providing guidance with
respect to Policy 4.5 - Rights Offerings of the TSX
Venture Exchange Corporate Finance Manual. Both Exchanges
intend to amend their formal rules to incorporate the guidance
contained in the foregoing publications.
Pre-clearance of Rights Offering Documents
Notwithstanding that a rights offering circular is no longer
subject to CSA review and approval prior to delivery to a listed
issuer's security holders, both Exchanges will still require
the pre-clearance of rights offering documents including the rights
offering notice (Form 45-106F14), together with the rights offering
circular (Form 45-106F15), or rights offering prospectus (the
Rights Offering Documents). The Rights Offering Documents should be
filed in draft form with TSX at least five (5) trading days prior
to finalization. The TSXV Guidance does not specify a minimum
number of days like the TSX Guidance does, it only indicates that
the Rights Offering Documents should be filed in draft form with
the TSXV prior to finalization in order to provide sufficient time
for TSXV to review the pricing, mechanics and timing of the rights
offering in order to maintain an orderly market for the trading of
the listed securities and the rights.
Determination of Record Date
Effective immediately, both Exchanges have reduced the advance
notification period to set the record date for all rights offerings
from seven (7) trading days to five (5) trading days.
Additional TSXV Guidance
Subsection 4.3 of TSXV Policy 4.5 is proposed to be amended to
provide that the subscription price for securities to be acquired
on the exercise of rights cannot in any case be less than $0.01.
Until such time as the proposed amendments to TSXV Policy 4.5
become effective, the TSXV will, on application, grant waivers of
the currently stipulated $0.05 minimum subscription price, provided
that the subscription price for the securities to be acquired on
the exercise of the rights is not less than $0.01.
Subsection 4.4 of TSXV Policy 4.5 is proposed to be amended to
provide that the minimum exercise price of a warrant forming part
of a unit to be acquired on the exercise of a right must not be
less than the market price prior to the news release announcing the
rights offering and in any case must not be less than $0.05.
TSXV Policy 4.5 includes references to the rights being listed
for trading on the TSXV and is proposed to be amended to expressly
provide that rights may be, but are not required to be, listed for
trading on the TSXV, at the election of the issuer. Until such time
as the proposed amendments to TSXV Policy 4.5 become effective, the
TSXV will, on application, approve a particular rights offering
where the issuer elects not to list the rights for trading. An
issuer that has applied for or intends to apply for a waiver of the
listing requirement for a rights offering must specifically
disclose that it has made such application or intends to make such
application, as the case may be, in the press release announcing
the rights offering. In any case all rights must be
It is also proposed that the Policy be amended to provide that
shareholder approval of the creation of any new control person of
an issuer as a consequence of a stand-by commitment for a rights
offering generally will not be required, provided that the rights
are listed for trading on the TSXV and the subscription price for
the rights is at a “significant discount” to market
price. A “significant discount” would be equal to at
least the maximum discount to market price allowed for private
placements. If either of these criteria is not satisfied, the TSXV
may require shareholder approval of the creation of the new control
person. Further, before the TSXV will accept a rights
offering which includes a stand-by commitment, any individual who
may own or control, beneficially or as nominee, directly or
indirectly, securities representing more than 10 percent of the
voting rights attached to all outstanding voting securities of the
issuer on the completion of the rights offering must first file
with the TSXV a duly completed Personal Information Form or, if
applicable, a Declaration in the required form.
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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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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