The Toronto Stock Exchange will be requiring TSX-listed companies to provide new disclosure relating to security-based compensation plans, as well as post and maintain their governance documents on their websites. The full text of the amendments to the TSX's Company Manual is available here.

Gowling WLG Focus

The amendments strike a thoughtful balance between the burdens of existing disclosure requirements for TSX-listed companies, and the need for more relevant and centralized disclosure for investors. The amendments represent the culmination of a consultation process which began with a proposal in May of 2016, and a subsequent amendment published in April of 2017.

The security-based compensation disclosure amendments require, among other things, the disclosure of an annual burn rate, and will become effective for non-exempt TSX-listed companies for fiscal years ending on or after October 31, 2017. The website requirements will take effect on April 1, 2018.

TSX-listed companies should commence a review of their existing security-based compensation disclosure as the additional burn rate disclosure, discussed below, will be required for up to a three-year trailing period. TSX-listed companies should also review their existing disclosure policies and processes to ensure initial, and thereafter ongoing, compliance with the new website requirements.

Security-Based Compensation Disclosure Requirements

The amendments to security-based compensation disclosure[1] introduce a new annual burn rate for each security-based compensation arrangement, and simplify and clarify existing disclosure of security-based awards.

New Burn Rate

TSX-listed companies are required to disclose the annual burn rate for each security-based compensation arrangement maintained by the company, for each of its three most recently completed fiscal years (or less, in certain limited circumstances). Calculation of the burn rate[2] is expressed as a percentage and is calculated by dividing the number of awards granted under the arrangement during the applicable fiscal year, by the weighted average number of securities outstanding for the applicable fiscal year. If the award includes a multiplier, the disclosure must also include details about the multiplier.

Amendments to Existing Disclosure

The amendments clarify the type of disclosure required in respect of awards under security-based compensation arrangements in shareholder meeting materials. Specifically, disclosure is required as follows:

  • Maximum Awards: the maximum number of securities issuable under each arrangement expressed as a fixed number (together with the percentage this number represents relative to the number of issued and outstanding securities of the listed company) or fixed percentage of the number of issued and outstanding securities of the listed company;
  • Outstanding Awards: the number of outstanding securities awarded under each security-based compensation arrangement, together with the percentage this number represents relative to the number of issued and outstanding securities of the listed company; and
  • Remaining Awards for Grant: the number of securities under each arrangement that are available for grant, together with the percentage this number represents relative to the number of issued and outstanding securities of the listed company.

This security-based compensation arrangement disclosure is required as at the end of the company's most recently completed fiscal year.

Website Requirements

The amendments[3] will bring TSX-listed companies more in-line with existing practices of companies listed on other senior exchanges. As of April 1, 2018, TSX-listed companies will be required to post and maintain the following documents on a separate web page that is accessible from the company's website:

  • articles of incorporation, amalgamation or continuation or any other constating or establishing documents of the company and its by-laws; and
  • if adopted, copies of the majority voting policy, advance notice policy, position descriptions for the chairman of the board and the lead director, board mandate, and board committee charters.

Listed companies whose website is shared with other companies will be required to have a separate, dedicated webpage on the website for each listed company for the purposes of compliance.

The amendments do not apply to certain non-corporate issuers, inter-listed issuers and international inter-listed issuers.


[1] Section 613(d) of Part VI of the TSX Company Manual.

[2] The calculation is set out in new Section 613(p) of the TSX Company Manual.

[3] Under a new Section 473, and amended Section 461.3 and Part XI of the TSX Company Manual.

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