Are You Ready for the TSX’s New Disclosure Requirements?
February 25th, 2018
The Toronto Stock Exchange (TSX) has amended the TSX Company Manual and introduced new requirements for the posting of certain key governance documents online for most TSX-listed issuers, as well as disclosure of securities based compensation arrangements. The newly amended disclosure rules are effective for financial years ending on or after October 31, 2017 and the deadline for compliance is April 1, 2018.
Why Were These Changes Made?
The website disclosure amendments are intended to improve access to information for investors by centralizing locations of some publicly-available documents.
What Do These Changes Mean?
Website Disclosure Arrangements
The new amendments require listed issuers to post certain documents on their websites that were previously filed on the System for Electronic Document Analysis and Retrieval (SEDAR) as well as additional policies and governance documents. These documents must be easily identifiable and accessible on either the listed issuers home page or its investor relations page and must be posted no later than April 1, 2018.
The most current versions of the following documents must be posted on a listed issuers website:
- articles of incorporation, amalgamation, continuation or any other constating or establishing documents of the issuer and its bylaws; and
- if adopted, copies of any:
- majority voting policy;
- advance notice policy;
- position description for the chairman of the board;
- position description for the lead director;
- board mandate;
- board committee charters.
These web disclosure requirements do not apply to:
- eligible interlisted issuers;
- eligible international interlisted issuers;
- exchange-traded funds;
- closed-end funds; or
- issuers of exchange-traded notes.
The TSX has noted that the new web disclosure requirements do not require an issuer to create new policies, only to disclose those already adopted and in place. In addition, issuers will not be required to translate documents that must be disclosed into another language. The TSX will also consider excluding the disclosure of any policies containing sensitive or confidential information on a case-by-case basis.
Securities Based Compensation Arrangements
Under the new rules for securities based compensation disclosure in section 613 of the Company Manual, listed issuers must be disclosing certain information in their proxy circulars for any years ending on or after October 31, 2017.
This information includes:
- Burn rate: listed issuers must disclose, annually, a burn rate for each security based compensation arrangement maintained by the issuer for the three most recently completed fiscal years (or each fiscal year since adoption where an arrangement has not existed for three fiscal years). Listed issuers must also disclose the burn rate for all shareholders meetings for the three most recent fiscal years.
- Awards: listed issuers must disclose the vesting and term of securities awarded under all security based compensation arrangements, not just stock option plans. Disclosure of maximum number of awards issuable under each plan, the number of outstanding securities awarded under each plan, and the number of awards that remain available for grant under each plan.
- Time Frame: time frames for disclosure have been changed. Now, disclosure regarding security based compensation arrangements must be prepared at the end of the listed issuer’s most recently completed financial year for any annual meeting. This disclosure is required whether or not security holder approval will be sought for a plan matter and is intended to better align with disclosure required of executive compensation under securities legislation. For any meeting other than an annual meeting where security holder approval will be sought for a plan matter, disclosure would continue to be required as of the date of the meeting materials (other than annual burn rate).
If you have questions about your requirements under the new amendments, contact Financial Litigation. We provide financially focused advocacy for business owners and entrepreneurs and regularly receive referrals from other clients and law firms and have acted on behalf of companies of all sizes throughout Ontario. Schedule your consultation online, or by calling us at 416-769-4107 x1.