Amendments included as sections 628 and 629 of the TSX Company Manual and contain new filing and reporting forms
Effective June 1, 2007, changes to the TSX Company Manual amended the policies on Normal Course Issuer Bids (NCIB) and Debt Substantial Issuer Bids (DSIB). Meanwhile, proposed changes relating to the use of derivatives and accelerated buy backs in connection with NCIBs have been postponed due to the number of comments received by the TSX.
Summary of new NCIB Provisions
The following is a summary of key points of the new provisions:
- The rolling 2% restriction on the repurchase of shares within any 30 day period has been eliminated for issuers that are not investment funds. The new limit is now the greater of 25% of the average daily trading volume (ADTV) and 1000 securities per trading day. This limit will only apply to purchases made through the TSX. The rolling 2% limit for investment funds remains.
- The ADTV is defined as the trading volume on the TSX for the most recently completed six calendar months preceding the date of acceptance of the notice of NCIB by the TSX, divided by the number of trading days for the relevant six months. The calculation excludes any purchases made by the listed issuer through the TSX under its NCIB during these preceding six months, and also excludes purchases made through the facilities of another exchange.
- The 12-month limit remains the same, and issuers are still entitled to repurchase the greater of 10% of the public float on the date of acceptance of the NCIB by the TSX or 5% of the class of securities issued and outstanding on the date of acceptance of the NCIB by the TSX, excluding securities held by or on behalf of the listed on the issuer on such date.
- The definition of “public float” now also excludes securities that are pooled, escrowed or non-transferable, in addition to those that are owned or over which control or direction is exercised by the issuer, a senior officer or director or a principal security holder of the issuer.
- A listed issuer may make one block purchase per calendar week that exceeds the daily repurchase restrictions, subject to the maximum annual aggregate limits. A “block” is defined as a quantity of securities that either (1) has a purchase price of $200,000 or more; (2) consists of at least 5,000 securities and has a purchase price of at least $50,000; or (3) consists of at least 20 board lots of the security and totals 150% or more of the ADTV for that security; and are not owned, directly or indirectly, by an insider of the listed issuer. Once the block purchase exception has been relied upon, the listed issuer may not make any further purchases under the NCIB for the remainder of that calendar day.
Implementation and transition
The amendments were effective as of June 1, 2007. As of the effective date, all new notices of intention to make an NCIB or DSIB are required to follow the new rules and any issuer bids whose commencement date was prior to June 1, 2007, or for which TSX had accepted notice in writing prior to June 1, 2007 but had not yet commenced, were permitted to comply with either the old rules or the new rules.