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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.