The Toronto Stock Exchange published proposed amendments to its Company Manual today that would extend the current exemption from security holder approval in cases where listed issuers adopt security based compensation arrangements for employees of a target issuer in the context of an acquisition, to new security based compensation arrangements created to retain employees of the target. In such cases, the number of securities issuable under the security based compensation arrangement could not exceed 2% of issued and outstanding securities of the issuer and no more than 25% of the issued and outstanding securities of the issuer could be issued as consideration for the acquisition (including those issuable under the security based compensation agreement). Ultimately, the amendments would formalize an exemption currently granted by the TSX on a discretionary basis.
The proposed amendments to the Manual would also attempt to clarify the definition of a "backdoor listing" and clarify the discretion of the TSX to either exempt a transaction from the requirements to meet original listing requirements that may otherwise constitute a backdoor listing or consider a transaction a backdoor listing even if it may not otherwise qualify as one.
The TSX and OSC are accepting comments on the proposed amendments until January 13, 2014.