Canada: Toronto Stock Exchange Proposes To Amend Public Company Acquisition Buy-Side Security Holder Approval Requirement

The Toronto Stock Exchange (TSX) is proposing to amend the requirement for buy-side security holder approval in connection with a dilutive acquisition by a listed acquirer of a target public company. The proposed amendment would permit the acquirer to increase the number of its securities issuable to target company security holders by up to an additional 25% of the security holder-approved fixed number of securities without seeking further acquirer security holder approval. The TSX believes this amendment will provide welcome flexibility to an acquirer that needs to increase the consideration offered in an acquisition for a target public company – in response to a competing bid or other market developments – whether the acquisition is proceeding by means of a take-over bid, arrangement or other form of public company acquisition.


Since November 24, 2009, the TSX has required a listed acquirer to obtain the approval of its own security holders for the issuance of more than 25% of the acquirer's listed issued and outstanding securities in connection with an acquisition of a target public company. The approval must be in respect of a fixed maximum number of securities. An acquirer is not permitted to issue a number of securities in excess of the approved maximum number of securities without obtaining further security holder approval. As a practical matter, acquirers will not request approval for more securities than the number contemplated by a publicly announced acquisition since to do so would signal a willingness to increase the consideration being offered.

The TSX noted that the recent changes to the take-over bid regime, including a minimum 105-day initial deposit period and minimum tender threshold of at least 50%, result in a longer exposure period for an acquirer in the context of an unsolicited offer which could expose the acquirer to increased market risk or increase the opportunity for a competing bid. Responding to market developments or a competing bid may be more difficult for an acquirer offering share consideration when prior security holder approval must be obtained.

Proposed amendments

The TSX has published for comment until July 16, 2018 proposed amendments to TSX Staff Notice 2012-003. The proposed amendments will permit an acquirer to issue up to an additional 25% of the fixed number of securities previously approved for issuance by the acquirer's security holders without seeking further security holder approval. The amendments will become effective upon the TSX publishing a final amended Staff Notice.

The proposed amendments are limited in scope. The additional securities must be issuable to target company security holders pursuant to an increase in the consideration offered in the acquisition and cannot be issuable in any other circumstances. To ensure that the acquirer's security holders are provided with sufficient information to make a reasonably informed decision, an acquirer will be required to include the following statement in its proxy circular prepared in connection with seeking the required security holder approval:

"TSX will generally not require further security holder approval for the issuance of up to an additional [X] securities, such number being 25% of the number of securities approved by security holders for the transaction." 

Alternatives considered

The TSX considered amending the requirement to obtain approval of security holders for a fixed number of securities by affording the board of directors of the acquirer the discretion, in accordance with the board's fiduciary duties, to vary the security holder approved number of securities constituting all or some of the offered consideration.. The TSX rejected this alternative because it would not provide security holders with sufficient information for the purpose of considering approval and because providing the acquirer's board of directors with unlimited discretion was too significant a departure from the TSX's general approach to security holder approval.

The TSX also considered maintaining the current requirements. The TSX believes that some flexibility is warranted and reasonable provided that there are limitations associated with the flexibility.

Request for comments

The TSX is seeking comments on the proposed amendments, including specifically with respect to the following questions:

  1. Are the proposed amendments an appropriate balance in terms of providing flexibility to compete with superior proposals and security holder approval? If not, why not?
  2. Are either of the alternatives more appropriate. If so, why?
  3. If the TSX varies the disclosure and approval requirements as proposed, should the amended more flexible requirements be limited to formal take-over bids subject to the full 105-day initial deposit period? Should the relief be available to friendly deals where the initial deposit period is 35 days? Should it be available for all public company acquisitions (i.e., plans of arrangement, amalgamations, etc.)?
  4. Should the TSX consider expanding the proposed amendments to other security holder approval requirements under TSX rules, such as private placements and acquisitions more generally (i.e., asset acquisitions and private company acquisitions)? If so, why?
  5. Is the additional 25% limit based on the number of securities approved for issuance an appropriate threshold? Is there a lower or higher number that would be more appropriate? Is it appropriate to base the limitation on the number of securities subject to security holder approval?

Comments should be submitted in writing and delivered by July 16, 2018. If you have any questions regarding the proposed amendments or would like assistance with providing comments to the TSX, please contact any member of our M&A group.

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