As discussed in
our bulletin issued in October of 2015, the Canadian Securities
Administrators have adopted, effective December 8, 2015, certain
amendments to the rights offering regime in Canada (the
In an effort to assist issuers in taking advantage of the new
rights offering regime, and to provide guidance on the application
of their policies to rights offerings, the Toronto Stock Exchange
("TSX") and the TSX Venture Exchange
("TSXV") each published guidance on
January 18, 2016.
TSX and TSXV Guidance
The following guidance applies to rights offerings by both TSX
and TSXV issuers.
Pre-Clearance of Rights Offering Documents
Issuers undertaking a rights offering must file the following
rights offering documents in draft form with the TSX or TSXV, as
applicable, at least five trading days prior to finalization:
the rights offering notice
(Form 45-106F14); and
the Rights Offering Circular
Determination of Record Dates
The advance notification period to set the record date for all
rights offerings has been reduced from seven trading days to five
trading days. Therefore, all deficiencies raised by the TSX or TSXV
must now be resolved at least five trading days in advance of the
record date for the rights offering.
In addition to the above guidance, there is additional guidance
specific to rights offerings by TSXV issuers.
The TSXV has reduced the minimum subscription price to $0.01.
The minimum exercise price of a warrant must now not be less than
the market price prior to the news release announcing the rights
offering and in any event cannot be less than $0.05.
An issuer can now elect not to list rights for trading on the
Shareholder approval is no longer required for the creation of
any new control person as a consequence of a stand-by commitment,
provided that the rights are listed for trading and the
subscription price for the rights is at a significant discount to
the market price.
If a security holder will own securities representing more than
10 percent of the voting rights attached to all outstanding voting
securities of the issuer on the completion of a rights offering,
such individual (or, if not an individual, any director, officer or
insider of such security holder) must submit a duly completed
Personal Information Form (Form 2A) or, if applicable, a
Declaration (Form 2C1).
While rights offerings have historically been used in Canada as
a financing mechanism of last resort, they have generally been seen
as a primary funding mechanism in certain international
jurisdictions (including the United Kingdom, Hong Kong, and
Since the effective date of the CSA Amendments, a number of
rights offerings have been announced by Canadian reporting
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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.
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).