The Toronto Stock Exchange ("TSX") has proposed amendments to the TSX Company Manual that will (i) require listed issuers to post certain corporate governance type documents on their websites (the "Website Disclosure Amendment"), and (ii) amend the disclosure requirements for security based compensation arrangements (the "Security Based Compensation Amendment").
The TSX is seeking comments to the amendments until June 27, 2016. The amendments will only become effective following this public comment period and the approval of the Ontario Securities Commission. For the full text of the amendments and further instructions relating to public comment, see Amendments to Toronto Stock Exchange Company Manual (May 26, 2016).
Website Disclosure Amendment
The Website Disclosure Amendment would require TSX listed companies to post current copies of the following documents on a publicly accessible website:
- constating documents (such as articles, bylaws and similar documents);
- corporate policies that impact meetings of securityholders and voting;
- securityholder rights plans;
- security based compensation arrangements; and
- certain corporate governance documents (such as committee charters, codes of conduct and other similar documents).
In addition, the Website Disclosure Amendment replaces the requirement that companies describe their majority voting policies on an annual basis with the requirement that companies post a copy of such policies on their website.
The TSX has proposed the Website Disclosure Amendment to provide capital market participants with ready access to key securityholder documents. The TSX notes that while many of these documents are already required to be filed, and are therefore publicly available, on the System for Electronic Document Analysis and Retrieval, such documents are often either difficult to identify or locate. Given that "virtually all" TSX listed companies maintain websites, the TSX believes that compliance with these proposed amendments will not be onerous nor costly to issuers such that the changes will make accessing the documents easier for securityholders and entail little, to no, additional cost for listed companies.
Security Based Compensation Amendment
The Security Based Compensation Amendment broadens the scope of security based compensation arrangements subject to TSX rules to reflect the types of plans and awards the TSX is commonly seeing. In addition, these amendments are intended to simplify the disclosure required in information circulars, by introducing a new form (Form 15), which would prescribe, among other things, the following additional information in tabular form in information circulars:
- maximum number of securities issuable;
- outstanding awards;
- burn rate (the rate at which issuers use up the securities available for grant under a plan);
- eligibility of participants;
- vesting; and
These disclosure requirements would apply regardless of whether the information circular was in connection with a meeting where securityholder approval was being sought for security based compensation arrangements or otherwise in connection with a regular annual meeting. However, when securityholder approval is being sought for a security based compensation arrangement, the company must also disclose other key terms in sufficient detail as may reasonably be required for shareholders to approve the security based compensation arrangement.
The TSX has proposed the Security Based Compensation Amendment to minimize the extent to which TSX requirements are duplicative of Canadian securities law and to reflect the evolution of security based compensation arrangements away from the traditional stock option plan and towards a broader range of security based compensation offerings. The TSX believes that these proposed amendments strike an appropriate balance between meaningful disclosure while eliminating unnecessary information.