The Toronto Stock Exchange (TSX) has published for comment
proposed rules regarding dividend/distribution reinvestment plans
(DRIPs). The TSX and TSX Venture Exchange (TSXV) also recently
announced that they will permit four-letter stock symbols.
Proposed DRIP Rules
A DRIP allows an issuer's existing security holders to
re-invest their cash dividends or distributions by purchasing
additional securities from treasury, often at a discount to the
The TSX does not currently have specific rules relating to
DRIPs, and instead considers the approval of securities issued
under DRIPs in the same manner it considers general issuances of
securities. The proposed DRIP rules are intended to set out a
transparent set of standards and practices applicable to DRIPs to
expedite the process of adopting DRIPs.
The proposed rules include the following requirements:
TSX approval will be required for all DRIPs and
The price at which securities can be issued under a DRIP must
not be lower than the market price, less a 5% discount.
The number of additional securities to be listed under the DRIP
must be limited to either (a) a sufficient number of securities to
cover issuances for a two-year period, provided such number of
securities does not exceed 10% of the listed issuer's
securities that are issued and outstanding, on a non-diluted basis,
at the time approval of the DRIP is sought, or (b) a fixed number
of securities equal to 5% of the listed issuer's securities
that are issued and outstanding, on a non-diluted basis, at the
time approval of the DRIP is sought.
Issuers wishing to suspend, terminate, resume or reinstate a
DRIP must notify the TSX and advise their security holders by way
of a news release. The proposed rules generally codify current
market practices relating to DRIPs, and are therefore not expected
to have a significant impact on issuers that have a DRIP or are
considering adopting one. The TSX has requested comments on the
proposed DRIP rules by May 28, 2106.
Four-Letter Stock Symbols
The TSX and TSXV also recently announced that they are giving
listed issuers and applicants the option to reserve stock symbols
that consist of four letters. To ensure an equitable allocation
process, the TSX and TSXV will accept written requests for
four-letter stock symbols during an initial reservation period that
will expire on May 20, 2016, with procedures in place to allocate
four-letter symbols that are requested by multiple issuers during
this time. Following the initial reservation period, four-letter
stock symbols will be allocated on the customary "first come,
first served" basis.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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