TSX is proposing
new rules for listed companies on security-based compensation
arrangements and website postings. Comments on the proposals are
due by June 27, 2016.
What You Need To Know
Shareholder approval and TSX pre-clearance would still be
required for security-based compensation arrangements—no rule
changes are contemplated in these areas.
New disclosure would be required in proxy circulars about the
impact of multipliers on the number of securities issuable; burn
rates; and default vesting provisions.
Security-based compensation arrangements would have to be
posted on listed companies' websites. This includes inducement
grants and other individual awards not granted under a plan.
Companies may want to consider amending their arrangements to
remove confidential or competitively sensitive information.
Security-Based Compensation Arrangements
TSX-listed companies would have to include the following
information in their proxy circulars—something many seasoned
companies already do:
If an outstanding award includes a multiplier (e.g.,
treasury-settled PSUs which vest based on the attainment of certain
performance criteria), the multiplier must be explained and the
maximum payout must be used when disclosing the number of listed
securities issuable under the award.
The annual burn rate for the past fiscal year would be required
in all proxy circulars, while the annual burn rate for the past
three years would be required when a compensation plan is being
approved by shareholders.
Default vesting provisions would have to be summarized for all
arrangements, including whether vesting is time-based and/or
To simplify its rules, TSX would no longer require listed
companies to disclose in their proxy circulars information about
the maximum number of securities available to insiders; the method
for determining exercise prices and market appreciation of SARs;
the ability to transform stock options into SARs; terms for stock
options; causes of cessation of entitlements; amendment provisions;
assignability; financial assistance; and entitlements subject to
Listed Company Websites
Listed companies would have to post the following documents on
majority voting policies, advance notice by-laws and any other
policies impacting shareholder meetings or voting, as well as
articles, by-laws and other constating documents;
securityholder rights plans (poison pills);
security-based compensation arrangements, as noted above;
anti-corruption policies, environmental and social policies and
Many public companies already post some of these documents on
their websites, and if they don't, the documents can be found
on SEDAR (and the SEC's EDGAR system, in the case of
U.S.-listed companies). TSX's objective in proposing mandatory
website postings is to promote consistency in the marketplace and
easier access to listed companies' information.
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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