On March 23, 2020, the staff at the Toronto Stock Exchange (TSX) issued Staff Notice 2020-0002, which provides guidance on further measures the TSX is undertaking in response to the COVID-19 pandemic. In particular, the TSX stated that it will be providing temporary blanket relief from the following provisions of the TSX Company Manual.
Pursuant to sections 442 and 451 of the TSX Company Manual, issuers are required to file a Form 9 – Request for Extension or Exemption for Financial Reporting / Annual Meeting (Form 9) if it requires an extension of time for filing or mailing of its annual and / or its interim financial statements, respectively. During 2020, the TSX is providing relief from the requirement for issuers to file a Form 9 and notify the TSX for a late filing of its annual financial statements and / or its interim financial statements.
In accordance with section 464 of the TSX Company Manual, an issuer must hold its annual meeting of security holders within six months from the end of its fiscal year. Pursuant to the temporary relief, the TSX is extending the timeframe during which an issuer must hold its annual meeting of security holders during 2020 by permitting issuers to hold that meeting on any date in 2020 up to and including December 31, 2020, regardless of the issuer's fiscal year end. Issuers will not be required to submit a Form 9 in connection with this temporary relief.
Pursuant to section 613 of the TSX Company Manual, an issuer must obtain security holder approval of all unallocated options, rights or other entitlements ("awards") every three years after instituting a security based compensation arrangement (a "plan") that does not have a fixed maximum number of securities issuable. In addition, awards generally granted after three years following institution of a plan would require security holder ratification prior to exercise of such awards.
Further to the temporary relief described above regarding the timing of 2020 annual meetings of security holders, the TSX is extending the timeframe during which an issuer must obtain security holder approval of all awards under a plan. In addition, issuers may also continue to grant awards under the plan until the earlier of: (i) an issuer's 2020 annual meetings of security holders; and (ii) December 31, 2020. Awards granted during this timeframe may be exercised absent ratification of an issuer's security holders.
Section 628(a)(ix)(a) of the TSX Company Manual imposes a daily limit on the number of listed securities an issuer may acquire pursuant to a normal course issuer bid (NCIB). Purchases under an NCIB cannot exceed (when aggregated with all other purchases by the issuer during that trading day) the greater of: (i) 25 percent of the average daily trading volume of the listed securities of that class; and (ii) 1,000 securities per day. Pursuant to the temporary relief, from March 23, 2020, up to and including June 30, 2020, the TSX is modifying the volume purchase conditions contained in section 628(a)(ix)(a) of the TSX Company Manual. From March 23, 2020, up to and including June 30, 2020, the number of NCIB purchases can be up to 50 percent of the average daily trading volume of a class of listed securities rather than the stated limit pursuant to section 628(a)(ix)(a) of the TSX Company Manual.
Similarly, the TSX is providing temporary relief for participating organizations of the TSX acting on behalf of issuers for NCIB purchases, so that the amount of NCIB purchases can be up to 50 percent of the average daily trading volume of the listed securities of that class.
The TSX is providing relief from certain delisting criteria regarding the market value of an issuer's securities. From March 23, 2020, up to and including December 31, 2020, the TSX will not apply the delisting criteria in either section 712(a) of the TSX Company Manual (where the market value of an issuer's securities is less than $3,000,000 over any period of 30 consecutive trading days), or section 712(b) of the TSX Company Manual (where the market value of freely-tradable publicly-held securities is less than $2,000,000 over any period of 30 consecutive trading days) when determining whether or not to initiate a delisting review of an issuer's securities.
The definition of "market price" in Part I of the TSX Company Manual provides that the five-day volume weighted average trading price of an issuer's listed securities should be used to determine the market price of an issuer's securities. As the TSX is mindful that five days in the current volatile environment is a relatively long period of time to establish a market price, the TSX will, on a case-by-case basis, use a shorter time period for the purposes of pricing securities for private placements.
The TSX has stated that it will continue to monitor the effect that the pandemic and market conditions are having on the operation of its rules and its issuers. Please visit our COVID-19 Resource Centre for other COVID-19-related materials.