On September 1, 2016, the Toronto Stock Exchange (TSX) adopted (and the OSC approved) amendments to the rules governing dividend/distribution reinvestment plans (DRIPs). The new rules, which can be found at Section 617.1 of the TSX Company Manual (New DRIP Rules), provide a complete set of standards and practices applicable to DRIPs for their listed issuers. For your convenience, we have highlighted the New Drip Rules related to implementing and amending a DRIP below.

Under the New DRIP Rules, all new DRIPs (other than DRIPs providing for the payment of dividends or distributions solely with securities purchased on the secondary market) must be pre-cleared with the TSX at least five business days prior to the effective date of the DRIP. Once a DRIP has been pre- cleared by the TSX and approved by the board of directors of the listed issuer, the issuer must file certain prescribed documents with the TSX and pay a listing fee. Any amendment to an existing DRIP must also be pre-cleared by the TSX at least five (5) business days prior to the effective date of the amendment.

The TSX also sets out parameters for their listed issuer’s DRIPs. Under the New DRIP Rules, the price per listed security at which securities will be issued under a DRIP cannot be lower than the market price less a 5% discount. The listed issuers must also make some provision for fractional security interests that may result from the DRIP. All security holders must be eligible to participate in the DRIP, though listed issuers may limit the participation of security holders residing outside of Canada. Finally, the DRIP must state that all amendments to the DRIP must be pre-cleared by the TSX.

Please note that the TSX confirmed that listed issuers with DRIPs in effect prior to September 1, 2016, will be grandfathered and will not be required to comply with the New DRIP Rules until such time as those DRIPs are amended and require TSX approval.