Canada: TSX Clarifies Disclosure Expectations For Private Placements In Wake Of Eco Oro

Last Updated: November 13 2017
Article by Bryan Flatt and Chris Sunstrum


On November 2, 2017 the Toronto Stock Exchange (TSX) released a Staff Notice (the "Staff Notice") that seeks to clarify the TSX's expectations with respect to what information companies seeking TSX approval for a private placement are to provide. The Staff Notice, which follows the recent decision of the Ontario Securities Commission in In the Matter of Eco Oro Minerals Corp., appears to confirm the TSX is more closely scrutinizing not only private placement terms but also all relevant circumstances surrounding a company when deciding whether to approve a private placement and, if approved, whether to impose conditions (such as prior shareholder approval).


All listed companies must obtain the TSX's approval of a proposed private placement. Under the TSX's policies, private placements that would "materially affect control" of a listed company require prior approval of the company's shareholders as a condition to their completion. A transaction materially affects control if it provides a shareholder (or group of shareholders acting together) with the ability to influence the outcome of a shareholder vote, including the ability to block significant transactions, taking into account all relevant circumstances (such as the presence or absence of other large shareholders, prior voting patterns of other shareholders and the distribution of the company's voting shares). A transaction that results, or could result, in a new 20% voting position held by one shareholder or a group of shareholders acting together is deemed to materially affect control, absent unusual circumstances. Transactions resulting in a new position of less than 20% of the voting securities may also materially affect control, depending on the circumstances outlined above.

The OSC (which reviews TSX decisions) generally affords a high degree of deference to TSX decisions regarding the application of its policies, including whether a proposed private placement materially affects control of a company. One exception to that rule is if the TSX makes its decision without all relevant information.

In Eco Oro, the OSC overturned a TSX decision to approve a private placement by Eco Oro Minerals Corp.– without requiring shareholder approval – implemented in the midst of a proxy contest to replace the Eco Oro board (see our June 23, 2017 Update, OSC Clarifies Basis for Intervening in Eco Oro Tactical Private Placement). In that case, the OSC concluded the TSX was not aware of all relevant circumstances surrounding Eco Oro's private placement (including the pending proxy contest), in part due to the OSC's view that (i) Eco Oro was "less than forthcoming" in its disclosure to the TSX, and (ii) the TSX failed to make sufficient inquiries (such as reviewing public filings related to Eco Oro) regarding the circumstances surrounding the transaction. For that reason (among others), the OSC did not afford any deference to the TSX's decision.

The OSC also clarified that a private placement is considered to "materially affect control" of a company even if it only has a transient effect on control (such as impacting the results of a vote at a particular meeting) and whether or not "control" is obtained by an individual shareholder or group of shareholders acting together. This requires a careful analysis of the relevant circumstances surrounding a company at the time of the relevant private placement.

Finally, in Eco Oro the OSC expressed the view that if the TSX is in doubt about the effect of a private placement on control of a company, it should generally exercise its discretion to require shareholder approval or public disclosure of the private placement before closing to give stakeholders an opportunity to raise concerns with the TSX.

The Staff Notice

As part of the process of obtaining TSX approval of a private placement, the company must submit a completed Form 11 to the TSX, and a director or officer of the company must certify the form is complete and does not contain any misrepresentations.

Form 11 was designed, in part, for companies to provide the TSX with key information regarding the private placement. The Staff Notice expresses the TSX's expectation that a Form 11 include "any relevant significant matters" such as:

  • any upcoming shareholder meeting for which a record date has or is shortly expected to be determined,
  • any pending mergers, acquisitions, take-over bids, changes to capital structure or other significant transactions, and
  • any details regarding potential dissident shareholders and/or anticipated proxy contests.

The Staff Notice indicates this information is in addition to "any further information or documentation that may be requested by TSX".

This clarification appears directly respond to the Eco Oro decision and, in particular, the OSC's direction that the TSX make sufficient inquiries about the circumstances of a private placement. At this point, the impact of Eco Oro on the TSX's process for reviewing a private placement, and the circumstances in which it will require a delayed closing or shareholder approval, is still being assessed. Thus far, we have observed the TSX is more carefully scrutinizing private placements and more frequently requiring delayed closings. The Staff Notice may be further evidence of this trend.

Given the OSC will generally not defer to TSX decisions made on the basis of incomplete information, companies seeking to minimize the risk of a challenge to the TSX's approval of a private placement would be well advised to ensure their disclosure to the TSX is complete and accurate. More generally, the potential implementation of private placements in the context of other potentially significant developments affecting a company (such as take-over bids and proxy contests) must be carefully considered as securities regulators have more recently demonstrated an increased propensity to scrutinize – and in some cases set aside – those transactions.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions