Executive Summary
Following the completion of two comment periods in May 2016 and April 2017 respectively, the Toronto Stock Exchange (“TSX“) finalized amendments to Parts IV and VI of the TSX Company Manual (the “Manual“):
- introducing new website disclosure requirements for listed issuers (the “Part IV Amendments“); and
- amending the disclosure requirements regarding security based compensation arrangements (the “Part VI Amendments“).
The Part IV Amendments, including ancillary amendments to Part XI of the Manual, will become effective for TSX-listed issuers on April 1, 2018. The Part VI Amendments will become effective for TSX-listed issuers for financial years ending on or after October 31, 2017.
Part IV Amendments – Listed Issuer Website Disclosure
The Part IV Amendments, which introduce Section 473 to the Manual, require listed issuers (other than Non-Corporate Issuers, Eligible Interlisted Issuers and Eligible International Interlisted Issuers) to maintain a publicly accessible website and post the current, effective versions of their constating documents, and if adopted, certain corporate policies and corporate governance documents (i.e. majority voting policy, advance notice policy, position descriptions for the chairman of the board and the lead director, board mandate, and board committee charters).
The webpage containing the foregoing documents should be easily identifiable and accessible from the listed issuer’s home page or investor relations page. If a listed issuer’s website is shared with other issuers, each listed issuer should have a separate webpage on the website for the purposes of complying with Section 473. If any document required under Section 473 forms part of a larger document, a listed issuer may satisfy Section 473 by posting the current, effective version of the larger document.
Part VI Amendments – Security Based Compensation Arrangements Disclosure
The Part VI Amendments clarify and amend Section 613(d), which addresses the disclosure requirements of security based compensation arrangements (a “Plan”) when seeking security holder approval at a meeting, and introduce Section 613(p) to the Manual. Listed issuers are required by Section 613(d) to disclose their annual burn rate for each Plan and the formula used to calculate such burn rate is set out in Section 613(p). The annual burn rate is the rate at which a listed issuer awards securities under a Plan. It must be expressed as a percentage and is calculated by dividing the number of awards granted under the Plan during the applicable fiscal year by the weighted average number of securities outstanding for the applicable fiscal year. Under Section 613(p), listed issuers are required to disclose the annual burn rate for each of the listed issuer’s three most recently completed fiscal years for both Approval Meetings, and annual security holder meetings that are not Approval Meetings.
Section 613(d) was also amended to clarify the type of disclosure required in respect of the maximum number of securities awarded or to be awarded under a Plan (“Awards“), the number of outstanding Awards, and the number of Awards available for grant.
Lastly, Section 613(d) was amended to change the time period covering the disclosure. For any annual meeting (whether an Approval Meeting or not), the information should be prepared as at the end of the listed issuer’s most recently completed fiscal year. For any Approval Meeting, which is not also an annual meeting, the information (other than the annual burn rate) should be prepared as at the date of the materials, which would remain unchanged from the current requirements. The intent of this amendment is to align the disclosure requirements of Section 613(d) with executive compensation disclosure requirements of National Instrument 51-102F6 Statement of Executive Compensation.
Effective Dates of the Amendments
- The Part IV Amendments are effective for listed issuers on April 1, 2018; and
The Part VI Amendments are effective for listed issuers for financial years ending on or after October 31, 2017.