TORONTO STOCK EXCHANGE
NOTICE OF HOUSEKEEPING RULE AMENDMENTS TO THE TSX
COMPANY MANUAL
Introduction
In accordance with the Process for the Review and Approval of Rules and the Information Contained in Form
21-101F1 (the “Protocol”), Toronto Stock Exchange (“TSX”) has adopted, and the Ontario Securities
Commission has approved, certain housekeeping amendments (the “Amendments”) to Parts IV and VI of the
TSX Company Manual (the “Manual”). The Amendments are Housekeeping Rules under the Protocol and
therefore have not been published for comment. The Ontario Securities Commission has not disagreed with the
categorization of the Amendments as Housekeeping Rules.
Summary and Rationale of the Non-Public Interest Amendments
Section of the
Manual
Amendment
Rationale
1.
Part
IV
– Add
language
to Amend language in Section 461.3 to clarify that for the
Maintaining
a clarify
that
“votes purposes of TSX’s majority voting requirements (the
Listing – General cast” in this section “Majority Voting Requirement”) for director elections,
Requirements – includes both votes issuers must count both votes “for” and votes “withheld”
Sections 461.3 “for”
and
votes when counting the total votes cast for the election of a
and
461.4
– “withheld”.
director, and consequential amendment to Section 461.4.
Contents
of
Meeting
Plurality Voting versus Majority Voting
Materials
Under plurality voting for director elections, security holders
vote “for” or “withhold” their vote for each director or the slate
of directors. The director or slate is elected if one vote is cast
“for” the director or the slate, regardless of the number of
“withhold” votes. This voting standard is plurality voting
since the director or the slate is elected even if the majority
of security holders that voted “withheld” their vote rather
than voted “for” the election of the director or slate. As a
result, virtually every nominee director or slate is elected
with plurality voting.
When a majority voting policy is adopted pursuant to the
Majority Voting Requirement, a plurality voting standard still
applies, and security holders generally vote “for” or
“withhold” their vote for each individual board nominee. In
the case of plurality voting, a vote that is simply not cast, is
not counted toward either, the votes “for” or the votes
“withheld”. However, for the purposes of the Majority Voting
Requirement, “withheld” votes are considered “against”
votes, and such votes are counted as part of the total votes
cast with respect to the election of the individual board
nominee.
A typical majority voting policy that is acceptable to TSX
provides that a director who receives a majority of “withheld”
votes must tender his or her resignation, that the board will
generally accept that resignation absent exceptional
Section of the
Manual
Amendment
Rationale
circumstances, and that the board will publicly announce its
decision by news release. A director who receives a majority
of “withheld” votes is elected as a matter of corporate law,
but the Majority Voting Requirement is designed to ensure
that only those directors who receive more votes cast “for”
their election compared to votes cast as “withheld”, remain
on the board.
The Canada Business Corporations Act (“CBCA”) was
recently amended to require mandatory majority voting for
the election of directors of public corporations other than at
contested meetings.
1
Under mandatory majority voting,
security holders vote “for” or “against” each individual board
nominee, instead of “for” or “withheld”. Once in effect, these
amendments to the CBCA will likely satisfy the Majority
Voting Requirement, and TSX will likely not require issuers
incorporated under the CBCA to have a majority voting
policy in place.
The Majority Voting Requirement requires that a director
who is not elected by a majority of the votes cast with
respect to his or her election must immediately tender his or
her resignation to the board of directors. The board is
required to determine whether or not to accept the
resignation within 90 days after the date of the relevant
security holders’ meeting. The board is required to accept
the resignation absent exceptional circumstances.
Exceptional Circumstances
TSX does not require majority voting policies to list
examples of exceptional circumstances. While many
majority voting policies provide guidance regarding which
factors the board may determine to constitute exceptional
circumstances, such guidance is not required pursuant to
the Majority Voting Requirement. While TSX believes that
generally the board is in the best position to determine what
constitutes exceptional circumstances when determining
whether to accept a resignation, TSX will contact the issuer
to discuss the exceptional circumstance when a board of
directors determines not to accept a director’s resignation.
TSX reviews each situation on a case-by-case basis, taking
into account the unique factors applicable to each issuer.
TSX expects “exceptional circumstances” to meet a high
threshold. The board should not use “exceptional
circumstances” as a means to circumvent the policy
objectives of the Majority Voting Requirement. As TSX has
previously stated, TSX will consider avoidance or frustration
of the Majority Voting Requirement, through any means, a
failure to comply with it. Issuers should review TSX Staff
Notice 2017-0001 for TSX’s guidance regarding factors that
1
These amendments are not yet in force.
Section of the
Manual
Amendment
Rationale
TSX would likely accept as exceptional circumstances and
factors
that
TSX
does
not
consider
exceptional
circumstances.
Finally, TSX notes that a director who refuses to tender his
or her resignation in accordance with the Majority Voting
Requirement would be in breach of Section 716 of the
Manual. Such refusal may cause TSX to review the
director's suitability to be involved in the capacity of a
director, officer or other insider of TSX-listed issuers.
2.
Part
IV
– Replace
references Amend language to clarify that the dividend notification
Maintaining
a to
“Non-Corporate requirement under Section 428 is not applicable for
Listing – General Issuer” with “listed distributions made by all listed issuers (i.e. both Corporate
Requirements – issuer”.
and Non-Corporate Issuer) where there is an immediate
Section 428 –
consolidation.
Dividends
and
Other
Currently, Section 428 requires that all listed issuers
Distributions to
declaring a dividend on listed shares must provide notice to
Security Holders
TSX and a bulletin is then issued by TSX to commence “ex”
– Notice to the
trading of the shares. This notification requirement is
Exchange
currently not applicable in the case of a distribution by a
Non-Corporate Issuer that is to be paid entirely in securities
which
are
immediately
consolidated
following
the
distribution, resulting in no change to the number of
securities held by security holders (and thereby requiring
such
notification
by
Corporate
Issuers
in
similar
circumstances). In practice, because TSX does not trade
“ex” on such distributions (whether for Corporate or Non-
Corporate Issuers), TSX is of the view that a TSX bulletin
serves no purpose and may confuse the market.
3.
Part
VI
– Delete subsection (4) Remove the requirement for a participating organization to
Changes
in – Report of Sales.
report monthly sales regarding control block sales as such
Capital Structure
report may be redundant due to other reporting
of Listed Issuers Fix
typographical requirements for block trades under section 2.8 of National
- Section 632(4) errors
in
Sections Instrument 45-102 Resale of Securities.
– General Rules
632(7) and 632(8).
for Control Block
Fix typographical errors by replacing references to “”Form
Sales
on
the
45-102 Fl” with “Form 45-102 F1”.
Exchange;
Section 632(7) –
Term;
and
Section 632(8)-
First Sale
Text of the Amendments
The Amendments are set out as blacklined text at Appendix A. For ease of reference, a clean version of the
Amendments are set out at Appendix B.
Effective Date
The Amendments become effective on June 4, 2020.
APPENDIX “A”
BLACKLINE OF
NON-PUBLIC INTEREST AMENDMENTS TO THE TSX COMPANY MANUAL
Amendment 1
Contents of Meeting Materials
Sec. 461.3.
Each director of a listed issuer must be elected by a majority (50% +1 vote) of the votes cast
5
with
respect to his or her election other than at contested meetings
56
("Majority Voting Requirement").
A listed issuer must adopt a majority voting policy (a "Policy"), unless it otherwise satisfies the Majority
Voting Requirement in a manner acceptable to TSX, for example, by applicable statutes, articles, by
laws or other similar instruments. The Policy must, substantially, provide for the following:
(a) any director must immediately tender his or her resignation to the board of directors if he or
she is not elected by at least a majority (50% +1 vote) of the votes cast with respect to his or
her election;
(b) the board shall determine whether or not to accept the resignation within 90 days after the date
of the relevant security holders' meeting. The board shall accept the resignation absent
exceptional circumstances;
(c) the resignation will be effective when accepted by the board;
(d) a director who tenders a resignation pursuant to this Policy will not participate in any meeting
of the board or any sub-committee of the board at which the resignation is considered; and
(e) the listed issuer shall promptly issue a news release with the board's decision, a copy of which
must be provided to TSX. If the board determines not to accept a resignation, the news release
must fully state the reasons for that decision.
If an issuer adopts a Policy to satisfy the Majority Voting Requirement, it must post a copy of the Policy
on its website in accordance with Section 473.
Listed issuers that are majority controlled
67
are exempted from the Majority Voting Requirement. Listed
issuers with more than one class of listed voting securities may only rely on this exemption with respect
to the majority controlled class or classes of securities that vote together for the election of directors. A
listed issuer relying on this exemption must disclose, on an annual basis in its materials sent to holders
of listed securities in connection with a meeting at which directors are being elected, its reliance on this
exemption and its reasons for not adopting majority voting.
5
For the purposes of this section, when counting the total votes cast in respect of the election of a
director, “withheld” votes are considered “against” votes and must be counted in the total.
56
A contested meeting is defined as a meeting at which the number of directors nominated for election
is greater than the number of seats available on the board.
67
Majority controlled is defined as a security holder or company that beneficially owns, or controls or
directs, directly or indirectly, voting securities carrying 50 percent or more of the voting rights for the
election of directors, as of the record date for the meeting.
[…]
Sec 461.4
Following each meeting of security holders at which there is a vote on the election of directors at an
uncontested meeting, each listed issuer must forthwith issue a news release disclosing the detailed
voting results for the election of each director,
78
and must forthwith provide a copy of the news release
to TSX by email to disclosure@tsx.com if one or more director is not elected by at least a majority of
the votes cast with respect to his or her election.
78
The news release is intended to provide the reader with insight into the level of support received for
each director. Accordingly, issuers should disclose one of the following in their news release: (i) the
percentages of votes received 'for' and 'withheld' for each director; (ii) the total votes cast by ballot with
the number that each director received 'for'; or (iii) the percentages and total number of votes received'
for' each director.
[…]
Amendment 2
D. Dividends and Other Distributions to Security Holders
Notice to the Exchange
Sec. 428.
All listed issuers declaring a dividend on listed shares must promptly notify the Exchange's Listed Issuer
Services of the particulars, except as provided below. Listed issuers must complete and file a Form 5—
Dividend/Distribution Declaration (Appendix H: Company Reporting Forms) with the Exchange. For the
purposes of Exchange requirements, "dividends" also includes distributions to holders of listed
securities other than shares, such as units.
The Exchange must have sufficient time to inform its Participating Organizations and the financial
community of the details of each dividend declared. There must be a clear understanding in the market
place as to who is entitled to receive the dividend declared. Due to practical considerations, such as
long holidays and weekends, the Exchange requires prior notice be given to the Exchange in advance
of the dividend record date, the record date being the date of closing of the transfer books of the listed
issuer. Listed issuers with tentative dividend plans should schedule their board meetings well in
advance of the proposed record date.
A minimum five trading days notification period applies to all distributions, including special year end
distributions by income trusts and other similar non-taxable entities, whether or not:
(a) the exact amount of the distribution is known; or
(b) the distribution is to be paid in cash, trust units and/or other securities.
Where the exact amount of the distribution is unknown, listed issuers should provide, at the time they
file their Form 5, their best estimate of the anticipated amount of the distribution and indicate that such
amount is an estimate. Details regarding the payment of the distribution in cash, trust units and/or other
securities must be provided.
Upon determination of the exact amount of any estimated distribution, listed issuers must disseminate
the final details by press release and provide TSX's dividend administrator with a copy of the press
release.
The dividend notification requirement does not apply to a distribution by a Non-Corporate Issuerlisted
issuer that is to be paid entirely in securities which are immediately consolidated following the
distribution, resulting in no change to the number of securities held by security holders. In such case,
the Non-Corporate Issuerlisted issuer must disseminate a news release with the estimated distribution
amount at least four (4) trading days prior to the record date. Upon determination of the exact amount
of any estimated distribution, the Non-Corporate Issuerlisted issuer must disseminate the final details
by way of news release in accordance with the TSX timely disclosure policy.
Amendment 3
Sec. 632. General Rules for Control Block Sales on the Exchange
1.
Filing—The seller shall file Form 45-102F1 Notice of Intention to Distribute Securities under
subsection 2.8 of N1 45-102, Resale of Securities with TSX at least seven calendar days prior
to the first trade made to carry out the distribution.
2. Notification of Appointment of Participating Organization—The seller must notify TSX of
the name of the participating organization which will act on behalf of the seller. The seller shall
not change the participating organization without prior notice to TSX.
3. Acknowledgement of Participating Organization—The participating organization acting as
agent for the seller shall give notice to TSX of its intention to act on the sale from control before
any sales commence.
4. Report of Sales—The participating organization shall report in writing to the TSX on the last
day of each month the total number of securities sold by the seller during the month, and, if
and when all of the securities have been sold, the participating organization shall so report
forthwith in writing to TSX. [Deleted]
5. Issuance of TSX Bulletin—TSX shall issue a bulletin respecting the proposed sale from
control which bulletin will contain the name of the seller, the number of securities of the listed
company held by the seller, the number proposed to be sold, and any other information that
TSX considers appropriate. TSX may issue further bulletins from time to time regarding the
sales made by the seller
6. Special Conditions—TSX may, in circumstances it considers appropriate, require that special
conditions be met with respect to any sales. Possible conditions include, but are not limited to,
the requirement that the seller not make a sale below the price of the last sale of a board lot of
the security on TSX which is made by another person or company acting independently.
7. Term—The filing of Form 45-102FFlF1 is valid for a period of 30 days from the date the form
was filed.
8. First Sale—The first sale cannot be made until at least seven calendar days after the filing of
Form 45-102F FlF1.
APPENDIX “B”
CLEAN VERSION OF
NON-PUBLIC INTEREST AMENDMENTS TO THE TSX COMPANY MANUAL
Amendment 1
Contents of Meeting Materials
Sec. 461.3.
Each director of a listed issuer must be elected by a majority (50% +1 vote) of the votes cast
5
with
respect to his or her election other than at contested meetings
6
("Majority Voting Requirement").
A listed issuer must adopt a majority voting policy (a "Policy"), unless it otherwise satisfies the Majority
Voting Requirement in a manner acceptable to TSX, for example, by applicable statutes, articles, by
laws or other similar instruments. The Policy must, substantially, provide for the following:
(a) any director must immediately tender his or her resignation to the board of directors if he or
she is not elected by at least a majority (50% +1 vote) of the votes cast with respect to his or
her election;
(b) the board shall determine whether or not to accept the resignation within 90 days after the date
of the relevant security holders' meeting. The board shall accept the resignation absent
exceptional circumstances;
(c) the resignation will be effective when accepted by the board;
(d) a director who tenders a resignation pursuant to this Policy will not participate in any meeting
of the board or any sub-committee of the board at which the resignation is considered; and
(e) the listed issuer shall promptly issue a news release with the board's decision, a copy of which
must be provided to TSX. If the board determines not to accept a resignation, the news release
must fully state the reasons for that decision.
If an issuer adopts a Policy to satisfy the Majority Voting Requirement, it must post a copy of the Policy
on its website in accordance with Section 473.
Listed issuers that are majority controlled
7
are exempted from the Majority Voting Requirement. Listed
issuers with more than one class of listed voting securities may only rely on this exemption with respect
to the majority controlled class or classes of securities that vote together for the election of directors. A
listed issuer relying on this exemption must disclose, on an annual basis in its materials sent to holders
of listed securities in connection with a meeting at which directors are being elected, its reliance on this
exemption and its reasons for not adopting majority voting.
5
For the purposes of this section, when counting the total votes cast in respect of the election of a
director, “withheld” votes are considered “against” votes and must be counted in the total.
6
A contested meeting is defined as a meeting at which the number of directors nominated for election
is greater than the number of seats available on the board.
7
Majority controlled is defined as a security holder or company that beneficially owns, or controls or
directs, directly or indirectly, voting securities carrying 50 percent or more of the voting rights for the
election of directors, as of the record date for the meeting.
[…]
Sec 461.4
Following each meeting of security holders at which there is a vote on the election of directors at an
uncontested meeting, each listed issuer must forthwith issue a news release disclosing the detailed
voting results for the election of each director,
8
and must forthwith provide a copy of the news release
to TSX by email to disclosure@tsx.com if one or more director is not elected by at least a majority of
the votes cast with respect to his or her election.
8
The news release is intended to provide the reader with insight into the level of support received for
each director. Accordingly, issuers should disclose one of the following in their news release: (i) the
percentages of votes received 'for' and 'withheld' for each director; (ii) the total votes cast by ballot with
the number that each director received 'for'; or (iii) the percentages and total number of votes received'
for' each director.
[…]
Amendment 2
D. Dividends and Other Distributions to Security Holders
Notice to the Exchange
Sec. 428.
All listed issuers declaring a dividend on listed shares must promptly notify the Exchange's Listed Issuer
Services of the particulars, except as provided below. Listed issuers must complete and file a Form 5—
Dividend/Distribution Declaration (Appendix H: Company Reporting Forms) with the Exchange. For the
purposes of Exchange requirements, "dividends" also includes distributions to holders of listed
securities other than shares, such as units.
The Exchange must have sufficient time to inform its Participating Organizations and the financial
community of the details of each dividend declared. There must be a clear understanding in the market
place as to who is entitled to receive the dividend declared. Due to practical considerations, such as
long holidays and weekends, the Exchange requires prior notice be given to the Exchange in advance
of the dividend record date, the record date being the date of closing of the transfer books of the listed
issuer. Listed issuers with tentative dividend plans should schedule their board meetings well in
advance of the proposed record date.
A minimum five trading days notification period applies to all distributions, including special year end
distributions by income trusts and other similar non-taxable entities, whether or not:
(a) the exact amount of the distribution is known; or
(b) the distribution is to be paid in cash, trust units and/or other securities.
Where the exact amount of the distribution is unknown, listed issuers should provide, at the time they
file their Form 5, their best estimate of the anticipated amount of the distribution and indicate that such
amount is an estimate. Details regarding the payment of the distribution in cash, trust units and/or other
securities must be provided.
Upon determination of the exact amount of any estimated distribution, listed issuers must disseminate
the final details by press release and provide TSX's dividend administrator with a copy of the press
release.
The dividend notification requirement does not apply to a distribution by a listed issuer that is to be paid
entirely in securities which are immediately consolidated following the distribution, resulting in no
change to the number of securities held by security holders. In such case, the listed issuer must
disseminate a news release with the estimated distribution amount at least four (4) trading days prior
to the record date. Upon determination of the exact amount of any estimated distribution, the listed
issuer must disseminate the final details by way of news release in accordance with the TSX timely
disclosure policy.
Amendment 3
Sec. 632. General Rules for Control Block Sales on the Exchange
1. Filing—The seller shall file Form 45-102F1 Notice of Intention to Distribute Securities under
subsection 2.8 of N1 45-102, Resale of Securities with TSX at least seven calendar days prior
to the first trade made to carry out the distribution.
2. Notification of Appointment of Participating Organization—The seller must notify TSX of
the name of the participating organization which will act on behalf of the seller. The seller shall
not change the participating organization without prior notice to TSX.
3. Acknowledgement of Participating Organization—The participating organization acting as
agent for the seller shall give notice to TSX of its intention to act on the sale from control before
any sales commence.
4. Report of Sales— [Deleted]
5. Issuance of TSX Bulletin—TSX shall issue a bulletin respecting the proposed sale from
control which bulletin will contain the name of the seller, the number of securities of the listed
company held by the seller, the number proposed to be sold, and any other information that
TSX considers appropriate. TSX may issue further bulletins from time to time regarding the
sales made by the seller
6. Special Conditions—TSX may, in circumstances it considers appropriate, require that special
conditions be met with respect to any sales. Possible conditions include, but are not limited to,
the requirement that the seller not make a sale below the price of the last sale of a board lot of
the security on TSX which is made by another person or company acting independently.
7. Term—The filing of Form 45-102F1 is valid for a period of 30 days from the date the form was
filed.
8. First Sale—The first sale cannot be made until at least seven calendar days after the filing of
Form 45-102F1.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.