Staff Notices

2022-0001 May 5, 2022 Normal Course Issuer Bids Sections 628 and 629

STAFF NOTICE TO APPLICANTS, LISTED ISSUERS, SECURITIES LAWYERS AND PARTICIPATING ORGANIZATIONS

***This Staff Notice replaces TSX Staff Notice 2016-0001, which is repealed in its entirety.*** Toronto Stock Exchange ("TSX") staff is providing guidance on Sections 628 and 629 of the TSX Company Manual (the "Manual") for frequently asked questions in respect of normal course issuer bids ("NCIBs"). Questions in this Staff Notice have been organized under the following headings: (A) preparing the notice and press release; (B) executing purchases under the NCIB; (C) amending the NCIB; and (D) reporting obligations.

A. PREPARING THE NOTICE AND PRESS RELEASE Timing and Documents Required to Commence an NCIB 1) What are the filing requirements to undertake an NCIB?

Automatic Share Purchase Plans ("ASPP") 2) What is required to implement an ASPP? 3) How does an ASPP limit the issuer's ability to provide instructions to its buying broker for purchases under its NCIB?

Average Daily Trading Volume (“ADTV”) 4) How is the ADTV calculated? 5) If 25% of the ADTV calculation is 5,854.25 shares, what is the Daily Limit? 6) Are transactions made on other marketplaces (including Canadian ATSs) included in the trading volume to calculate the ADTV?

Interlisted Issuers 7) If an issuer is repurchasing its securities on a marketplace outside Canada, can it appoint two buying brokers, for example, one for purchases on TSX and one for purchases on NASDAQ?

8) If an issuer commenced an NCIB on another marketplace outside Canada and during that NCIB, the issuer decides that it also wants to make purchases on TSX, what does the issuer need to do?

9) If an interlisted issuer undertakes an NCIB and all purchases are made on the other exchange, what are the filing requirements with TSX?

Issued & Outstanding or Public Float Calculation 10) Should securities that are not freely tradable (e.g. subject to resale restrictions or escrow) be included in the public float or the number of issued and outstanding securities?

11) If an issuer is proposing an NCIB for its common shares, can it include securities that are convertible or exchangeable into common shares such as warrants or convertible debentures to calculate the number of issued and outstanding securities or the public float?

12) If an issuer buys the maximum number of securities permitted by TSX pursuant to an NCIB or otherwise prior to the expiry of the 12-month period, can it file a new NCIB and continue to purchase securities?

Material Undisclosed Information and Blackout 13) Can an issuer commence an NCIB if it has material undisclosed information or is in a blackout?

Press Release 14) What information should be included in the press release? B. EXECUTING PURCHASES UNDER THE NCIB Alternative Trading Systems ("ATSs") 15) If an issuer is proposing an NCIB with TSX, can it buy securities on a Canadian ATS? 16) Do TSX NCIB requirements apply to purchases made on other marketplaces? Block Purchases 17) Can a broker execute a block trade with multiple sellers, all represented by the same broker, or bundle pre-existing blocks to sell into one purchase order under an NCIB?

18) Can the issuer make a block purchase once it has used up all or a portion of its Daily Limit?

19) Can a block trade under the block purchase exception be with a broker other than the one assigned to conduct the purchases under the NCIB?

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Non-Independent Plans 20) Are purchases made on the market by a non-independent trustee counted toward NCIB limits?

Odd Lot/Small Shareholder Program 21) If an issuer has an NCIB and an odd lot purchase arrangement, is it possible to use such arrangement to purchase securities for cancellation under the NCIB?

Off-Exchange Block Purchases 22) What are the requirements for an issuer to proceed with off-exchange block purchases pursuant to an exemptive relief order (“Order”) from its principal securities regulator while conducting an NCIB on TSX?

Trading Rules Applicable to NCIBs 23) Can a broker buy back directly from offers originating from its own client selling from the same desk?

24) The Manual prohibits purchases pursuant to an NCIB at the opening of a trading session. Does it mean that the broker needs to wait until a first trade is made prior to making purchases for an NCIB?

25) The Manual prohibits purchases pursuant to an NCIB during the last 30 minutes of the trading session. Can an issuer purchase securities pursuant to an NCIB through the market on close facility?

26) If a broker makes NCIB purchases that are non-compliant with the Manual, for example, by creating an uptick or purchasing securities in the last 30 minutes of the trading session, what should be done with the purchased securities?

27) Can securities purchased in error under an NCIB which are taken into inventory by the buying broker firm be resold into such NCIB?

28) If there is a higher trade price on an ATS, can I enter that price for purchases on TSX and not be deemed to have created an uptick?

C. AMENDING THE NCIB Number of Securities Sought 29) Can an issuer increase the maximum number of securities sought under its NCIB?

Amendments and Terminations 30) What is required to amend an NCIB?

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31) Can an issuer terminate its current NCIB early and commence a new NCIB? Amendments to ASPPs 32) Is a press release required when an ASPP is amended? In particular, is it required if the trading parameters are altered?

Changing the Broker Assigned to the NCIB 33) What is required if an issuer decides to change its broker during the NCIB?

D. REPORTING OBLIGATIONS 34) Can the filing of Form 14A or 14B be delegated to the broker conducting the purchases? 35) How are NCIB purchases of debentures reported? E. ADDITIONAL STAFF NOTICES * * * * * A. PREPARING THE NOTICE AND PRESS RELEASE Timing and Documents Required to Commence an NCIB 1) What are the filing requirements to undertake an NCIB? Section 629 of the Manual requires issuers intending to commence an NCIB to prepare and submit to TSX draft copies of certain documents before they are submitted to TSX in final form. In order to provide TSX time to review and comment on the relevant documents before they are finalized, issuers must file the following documents with TSX at least seven business days prior to the commencement date of the NCIB:

a) a draft copy of the Form 12—Notice of Intention to Make an NCIB (a "Notice" or a "Form 12");

b) a draft copy of the press release; c) a draft copy of the automatic security purchase plan, if applicable; d) a detailed calculation of the average daily trading volume ("ADTV"), for issuers that are not investment funds; and

e) a detailed calculation of the public float, for issuers intending to purchase a number of securities based on their public float.

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TSX typically reviews these documents and provides comments within three business days of receipt of all the documents noted above. After TSX has reviewed these documents and provided comments, issuers must file the documents in final executed form at least three business days prior to the commencement date of the NCIB. The Notice must be duly executed by a senior officer or director of the issuer. The press release announcing the NCIB must be issued prior to market open at least two business days prior to the start of the NCIB.

For example, if the commencement date of an NCIB is Monday, March 31, then the draft documentation must be provided to TSX during business hours no later than Thursday, March 20. TSX must have the documents in final form by Wednesday, March 26 and the press release must be issued no later than prior to market open on Thursday, March 27.

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31

Monday

18

25

Tuesday

Wednesday 19

26

TSX comments Final executed provided documents to TSX

Thursday 20

Draft documentation to TSX 27

Press release issued prior to market open

TSX bulletin released

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28

Friday

Commencement date of NCIB

Reference should also be made to the instructions found in the Notice. https://decisia.lexum.com/tsx/f/en/item/454475/index.do The broker acting for an NCIB must be a TSX Participating Organization. For a list of TSX Participating Organizations please refer to http://www.tsx.com/trading/accessing-our-markets/member-firm-directory?l=A.

Automatic Share Purchase Plans ("ASPP") ASPPs allow issuers to repurchase their securities under an NCIB during trading blackout periods (the "ASPP Operating Period"), in accordance with a set of pre-established instructions.

2) What is required to implement an ASPP?

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The issuer and the buying broker must enter into a formal agreement, substantially in compliance with the Ontario Securities Commission ("OSC") Staff Notice 55-701. The agreement must be pre-cleared by TSX.

If the ASPP is entered into concurrently with the NCIB, the press release announcing the NCIB must state that the issuer has entered into an ASPP.

If the ASPP is entered into after the commencement of an NCIB, a press release must be issued stating that the issuer has entered into an ASPP. TSX does not require a revised Form 12 and there is no fee payable to TSX for entering into an ASPP.

Purchases made under an ASPP should be reported monthly to TSX using the applicable Form 14 — NCIB Monthly Reporting Form ("Form 14A or 14B").

3) How does an ASPP limit the issuer's ability to provide instructions to its buying broker for purchases under its NCIB?

Trading parameters must be set by the issuer and communicated to the broker prior to entering into a trading blackout period. During the ASPP Operating Period, the broker has discretion to purchase securities under the NCIB, within the trading parameters provided by the issuer. The issuer cannot provide any instructions to the broker during the ASPP Operating Period, including in regards to block purchases. Outside of the ASPP Operating Period, the issuer can direct and provide instructions to the broker.

Average Daily Trading Volume The ADTV is used to set the maximum number of securities that can be purchased on a daily basis under an NCIB for issuers that are not investment funds. Issuers that are not investment funds can purchase, on a daily basis, no more than the greater of 25% of the ADTV and 1,000 securities (the "Daily Limit") pursuant to an NCIB.

4) How is the average daily trading volume ("ADTV") calculated? The ADTV is calculated based on the most recently completed six calendar months preceding the date of acceptance of the Notice. For example, if the NCIB is set to start on June 15, the ADTV would be calculated for the period from December 1 to May 31.

5) If 25% of the ADTV calculation is 5,854.25 shares, what is the Daily Limit? The Daily Limit should be rounded down to the nearest whole number. In this instance, the Daily Limit is 5,854.

6) Are transactions made on other marketplaces (including Canadian ATSs) included in the trading volume to calculate the ADTV?

No. Only trading volumes that occurred on TSX are considered, as per the ADTV definition provided in Subsection 628(a)(i) of the Manual.

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Interlisted Issuers 7) If an issuer is repurchasing its securities on a marketplace outside Canada, can it appoint two buying brokers, for example, one for purchases on TSX and one for purchases on NASDAQ?

Yes, provided that the buying broker appointed for the purchases on the other marketplace outside Canada cannot directly place orders on TSX. Only one buying broker can make purchases on TSX under the NCIB. Purchases made on all marketplaces will count towards the maximum number of securities which may be purchased under the NCIB over the 12-month period, as stated in the Form 12 filed by the issuer, (the "Annual Limit").

8) If an issuer commenced an NCIB on another marketplace outside Canada and during that NCIB, the issuer decides that it also wants to make purchases on TSX, what does the issuer need to do?

The issuer should amend the bid that it commenced on the other marketplace so that it can also acquire securities on TSX. The issuer must file a Form 12 with the required documentation as described in "Timing and Documents Required to Commence an NCIB" with TSX. Any securities acquired under the bid on the other marketplace will count towards the Annual Limit.

9) If an interlisted issuer undertakes an NCIB and all purchases are made on the other exchange, what are the filing requirements with TSX?

If the purchases are not being made through the facilities of TSX, the NCIB is not subject to TSX rules and approval. A Form 12 need not be filed with TSX, nor does the Form 14A or 14B to report purchases need to be filed with TSX. However, cancelled securities must be reported to TSX monthly by filing a Form 1—Change in Outstanding and Reserved Securities ("Form 1").

Issued & Outstanding or Public Float Calculation The number of issued and outstanding securities or the public float is used to set the Annual Limit.

10) Should securities that are not freely tradable (e.g. subject to resale restrictions or escrow) be included in the public float or the number of issued and outstanding securities?

Securities that are pooled, escrowed or non-transferable cannot be included in the public float, but can be included in the number of issued and outstanding securities.

11) If an issuer is proposing an NCIB for its common shares, can it include securities that are convertible or exchangeable into common shares such as warrants or convertible debentures to calculate the number of issued and outstanding securities or the public float?

No. Only the securities of the class subject to the NCIB which are issued and outstanding are included in the calculation.

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TSX will make an exception, however, if an issuer has two classes of listed securities that are automatically interconvertible, without any action on the part of the issuer or security holder, for example securities that are interconvertible based on the residency of the security holder

12) If an issuer buys the maximum number of securities permitted by TSX pursuant to an NCIB or otherwise prior to the expiry of the 12-month period, can it file a new NCIB and continue to purchase securities?

No. The issuer cannot undertake a new NCIB before the 12-month period has expired. Material Undisclosed Information and Blackout 13) Can an issuer commence an NCIB if it has material undisclosed information or are in a blackout?

An issuer may begin an NCIB during a blackout if the issuer provides written confirmation that there is no material undisclosed information. Under a blackout there is a presumption of material undisclosed information (which would preclude starting the NCIB), but this presumption can be refuted with written representation in the Form 12 to confirm that the issuer does not have material undisclosed information despite being in blackout. This written representation should be captured in the Form 12 under question 13 (other information). No additional disclosure is needed for the press release for this matter.

Press Release 14) What information should be included in the press release? Issuers should summarize the material aspects of the contents of the notice, including the following:

  

     

the number of securities the listed issuer intends to repurchase and the percentage it represents; the issued and outstanding number and the public float, if applicable. if not an investment fund, ADTV for the past six calendar months and daily limit (i.e. 25% of ADTV). if an investment fund, 2% of issued and outstanding securities; duration of the NCIB; the markets on which purchases will be made; the reason for the NCIB; any restrictions under the NCIB; and details of any previous purchases in the preceding 12-month period, including the maximum number of securities that the listed issuer sought and obtained approval to purchase, the number of securities purchased, the manner in which the securities were purchased (i.e. on the market or pursuant to exemption orders issued by securities regulatory authorities), and the volume weighted average price paid; and any other significant info (for example, any special exemptions, automatic securities purchase plan).

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B. EXECUTING PURCHASES UNDER THE NCIB Alternative Trading Systems ("ATSs") 15) If an issuer is proposing an NCIB with TSX, can it buy securities on a Canadian ATS? In Canada, there are a number of marketplaces or ATSs trading securities listed on TSX. Issuers and their buying brokers making purchases on ATSs must satisfy themselves that they are properly relying on an issuer bid exemption under applicable securities laws and are in compliance with those requirements, some of which differ from TSX requirements.

TSX does not have an objection to an issuer buying its securities on Canadian ATSs provided that it has been disclosed under the heading "Method of Acquisition" in section 3(a) of the Notice as well as in the press release. If the issuer intends to buy its securities on Canadian ATSs, the disclosure in the press release must indicate that purchases may be made on the open market through the facilities of TSX and/or alternative Canadian trading platforms.

Issuers are reminded that many of the brokers use smart order routers which may direct purchases to all marketplaces in Canada. An issuer stating that its NCIB purchases will only be made through the facilities of TSX should ensure that its buying broker is aware of the marketplace limitation and the buying broker may not be able to use its smart order router.

16) Do TSX NCIB requirements apply to purchases made on other marketplaces? Purchases made on other marketplaces are not subject to the TSX trading restrictions such as upticks, trading prohibition at the opening or the close and the Daily Limit (there may be other limitations or restrictions that are subject to purchases on these marketplaces). However, for the purpose of calculating the Annual Limit of securities that may be purchased on TSX pursuant to an NCIB, issuers must include purchases made through the facilities of a stock exchange or otherwise, but may exclude purchases made under a circular bid.

TSX reminds issuers and buying brokers making purchases on other marketplaces to satisfy themselves that the issuer bid is compliant with applicable securities laws and the requirements of the other marketplaces. For example, TSX notes that section 101.2 of the Securities Act (Ontario) contains conditions for the issuer bid exemption, including bids made on a published market other than a designated exchange. TSX is a designated exchange for the purposes of the Securities Act (Ontario), however not all marketplaces (Canadian or foreign) are designated exchanges.

Block Purchases Once every calendar week, issuers may exceed their Daily Limit by making a block purchase. 17) Can a broker execute a block trade with multiple sellers, all represented by the same broker, or bundle pre-existing blocks to sell into one purchase order under an NCIB?

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