TSX Proposes Mandatory Web-Site Disclosure
The Toronto Stock Exchange recently published proposed amendments to its company manual to:
- (i) introduce website disclosure requirements for TSX listed issuers; and
- (ii) reduce and revise the annual disclosure requirements for security based compensation arrangements.
The proposed amendments will not be effective until the TSX receives the approval of the Ontario Securities Commission following the current public notice and comment. Comments, if any, should be in writing and delivered to the TSX by June 27, 2016.
Proposed Mandatory Website Disclosure Requirements
The TSX is proposing to introduce a requirement that listed issuers maintain a publicly accessible website containing current copies of:
- (i) Constating documents including articles, trust indentures, partnership agreements, by-laws and other similar documents;
- (ii) Corporate policies that may impact meetings of security holders and voting, including advance notice and majority voting policies;
- (iii) Security holder rights plans, commonly known as poison pills;
- (iv) Security based compensation arrangements; and
- (v) Corporate governance documents, including charters of board committees, code of ethical business conduct, position descriptions, board mandate, anti-corruption policies and other environmental and social policies and whistleblower policies.
The webpage(s) containing the above noted documents will need to be easily identifiable and accessible from the listed issuer's home page or investor relations page.
The TSX has stated that this requirement is being proposed to provide participants in the Canadian capital markets with ready access to key security holder documents. The TSX noted that while many, but not all, of these documents are already required to be filed on SEDAR by listed issuers, these documents are often difficult to find on SEDAR.
Proposed Reduced Annual Disclosure Requirements for Security Based Compensation Arrangements
Currently, listed issuers are required to provide detailed annual disclosure on each previously approved security based compensation arrangement of the issuer in the issuer’s management information circular delivered to shareholders in advance of an AGM. If the proposed website disclosure requirements approved above are implemented, full copies of those security based compensation arrangements will be available on the listed issuer’s website.
As such, and in order to provide more meaningful disclosure on such plan, the TSX proposes to reduce and revise its annual disclosure requirements to require disclosure of the following for each security based compensation plan:
- (i) the maximum number of securities issuable;
- (ii) the number outstanding awards;
- (iii) the burn rate (which is essentially the rate at which the unused “plan reserve” at the beginning of the fiscal year was “spent” during the year);
- (iv) the eligible participants;
- (v) the vesting provisions;
- (vi) any amendments made to the plan in the most recent fiscal year, and
- (vii) other key terms necessary to enable a reasoned judgment on the security based compensation arrangement.
More detailed disclosure will continue to be required for any new security based compensation arrangements that a listed issuer proposes to adopt subject to shareholder approval.
Invitation for Discussion:
If you would like to discuss this article in greater detail, or any other business law matter, please do not hesitate to contact one of the lawyers in the Business Law group at Shea Nerland LLP.
Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.