On April 28, 2016 the Toronto Stock Exchange (the
"TSX") published a set of proposed amendments to the
TSX Company Manual (the "Manual"), which
are available for public comment until May 28, 2016.
The proposed amendments deal specifically with TSX requirements
regarding Dividend/Distribution Reinvestment Plans
("DRIPs"). Currently the Manual does not
provide for any specific requirements related to DRIPs.
Historically, where a DRIP provides for the issuance of additional
securities from the treasury, the TSX treated the DRIP under the
general provisions for additional listings of securities under the
Manual. However, these provisions are not specifically tailored to
DRIPs, which has caused some confusion among issuers regarding how
to implement or amend a DRIP.
The proposed amendments address the following matters related to
(a) Implementing a DRIP
All DRIPs that provide for the issuance of additional listed
securities from the treasury are subject to TSX pre-clearance.
Following TSX and board approval, the issuer must provide the TSX a
final copy of the DRIP, a certified copy of the board approval, and
an additional listing application together with an opinion of
counsel regarding the securities to be issued pursuant to the
(b) Requirements Applicable to DRIPs
The proposed amendments provide for several requirements
specific to DRIPs, including:
all DRIPs must state the price that
each listed security will be issued (provided that the price must
not be lower than the market price less a 5% discount);
all DRIPs must note the maximum number
of additional securities to be listed under the DRIP, including
securities issuable pursuant to an optional cash payment, and must
have a provision dealing with fractional security interests that
may result from the DRIP;
all security holders of an issuer must
be eligible to participate in the DRIP, although participation for
security holders residing outside of Canada may be limited;
all DRIPs must specifically state that
amendments to the DRIP must be pre-cleared by the TSX.
(c) Listing Additional Securities under an Existing DRIP
Where additional securities are to be listed under an existing
DRIP, the issuer must file a DRIP additional listing application
comprised of a letter notice and legal opinion.
(d) Amending a DRIP
All amendments to a DRIP must be pre-cleared by the TSX.
(e) Suspending or Terminating/Resuming or Reinstating a
Where an issuer proposes to suspend or terminate a DRIP (or to
resume or re-instate a DRIP), it must advise its security holders
of the action by way of a news release and must notify the TSX by
filing a copy of the news release.
The Comment Period
The TSX has requested responses to two questions in
Are there any other requirements the
TSX should consider adopting regarding DRIPs?
Is it appropriate to limit the
discount at which securities may be issued under a DRIP to 5% of
the market price?
Comments on the Amendments are requested to be made in writing
and should be delivered to Catherine De Giusti, legal counsel for
the TSX, at firstname.lastname@example.org,
and Susan Greenglass, director of market regulation for the OSC, at
Mailing addresses for Catherine De Giusti and Susan Greenglass can
be found here.
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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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).