On October 19, 2017, the Toronto Stock Exchange (“TSX”) announced amendments to the TSX Company Manual which introduce new website and security-based compensation arrangement disclosure requirements for most TSX-listed issuers.
The website disclosure amendments are intended to improve the accessibility of information to investors by centralizing the location of certain publicly-available documents and will be effective as of April 1, 2018.
The amendments to the security-based compensation arrangement disclosure requirements were introduced to enhance and clarify the disclosure of security-based compensation arrangements and better align the TSX disclosure requirements with the executive compensation disclosure requirements under Canadian securities laws. These amendments will be effective for the financial years ending on or after October 31, 2017.
Website Disclosure Requirements
The amendments will require listed issuers to post on their websites certain documents ordinarily filed on SEDAR, together with additional policies and governance documents. Specifically, current versions of the following documents (or their equivalent) will need to be posted on a listed issuer’s website:
- its articles of incorporation, or any other constating or establishing documents and its by-laws; and
- if adopted, copies of its:
- majority voting policy
- advance notice policy
- position descriptions for the chairman of the board, and the lead director
- board mandate
- board committee charters
Eligible Interlisted Issuers, Eligible International Interlisted Issuers and Non-Corporate Issuers (as those terms are defined in the TSX Company Manual) are exempt from the new website disclosure requirements. The TSX declined to also exempt SEC foreign issuers or designated foreign issuers (as those terms are defined in Canadian securities laws) but has indicated that it may consider providing an exemption for those foreign issuers in the future.
In response to comments received during the comment process, the TSX has noted the following:
- the new website disclosure requirements do not require an issuer to create new policies, but rather to disclose those already adopted;
- the TSX will consider excluding policies that contain sensitive or confidential information on a case-by-case basis; and
- issuers will not be required to translate documents into another language.
Enhanced Security-based Compensation Arrangement Disclosure Requirements
Section 613 of the TSX Company Manual sets out the disclosure required for meeting materials provided to security holders for meetings to approve security-based compensation arrangements, as well as required annual disclosure. The amendments include:
- a new annual disclosure requirement to disclose, in a prescribed manner, the annual burn rate of each security-based compensation arrangement maintained by the issuer for the three most recently completed fiscal years. If an arrangement has not existed for three fiscal years (including similar predecessor arrangements) or was approved within the last three fiscal years, issuers should disclose the annual burn rate for each of the fiscal years completed since adoption. The annual burn rate disclosure may be omitted for the first fiscal year of newly adopted arrangements, but it must be included for new arrangements adopted in replace of similar arrangements;
- clarifications of the existing disclosure for securities awarded or to be awarded under a security-based compensation arrangement in relation to the maximum securities issuable under the arrangement, outstanding securities awarded and remaining securities available for grant; and
- changes to the time period covering the disclosure. For an annual meeting, the required information (other than the annual burn rate disclosure) must now be disclosed as of the end of the listed issuer’s most recently completed fiscal year (previously, this disclosure was required to be made as of the date of the meeting materials). For a meeting where security holder approval is being sought for security-based compensation arrangements, which is not also an annual meeting, the information should be prepared as at the date of the meeting materials (other than the annual burn rate disclosure), which would remain unchanged from the current requirements.
The TSX also announced that it has removed the previously proposed use of Form 15 (Disclosure of Security Based Compensation Arrangements).