Copyright 2008, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Securities Regulation, November 2008

Toronto Stock Exchange (TSX) staff has issued a notice (the Staff Notice) providing temporary relief until 11:59 p.m. EST on March 31, 2009, unless further extended, (the Effective Time) to listed issuers from certain requirements of the TSX Company Manual (the Manual) in relation to normal course issuer bids (NCIB) and the TSX's remedial review process. The Staff Notice also reminds issuers that in certain exceptional circumstances the TSX can adjust the volume weighted average trade price (VWAP) used to determine the "market price" for the purposes of pricing securities for private placements and about the financial hardship exemption from securityholder approval.

Normal Course Issuer Bids

The Staff Notice advises that until the Effective Time, the volume of purchases restriction in Subsection 628(a)(ix)(a) of the Manual is modified so that the amount of NCIB purchases must not exceed 50% of the average daily trading volume (ADTV) for the security, rather than 25% of the ADTV. This temporary relief applies to any relevant NCIB purchase made, or purchases made under NCIBs renewed or launched, prior to the Effective Time.

The Staff Notice grants similar relief to TSX participating organizations acting on behalf of issuers for NCIB purchases of securities until the Effective Time.

All other provisions in Sections 628 and 629 of the Manual and Part 6 of the TSX Trading Rules in connection with NCIBs are not altered by the Staff Notice.

Remedial Review Process

The Staff Notice advises that the TSX is modifying Section 707(a) of the Manual until the Effective Time to give issuers under a remedial review up to 210 days (up from 120 days) to remedy the deficiencies that had triggered the delisting review and any additional deficiencies that arose during the review period. All other provisions of Part VII of the Manual are not altered by the Staff Notice.

"Market Price" Definition

The Staff Notice advises that the TSX will, on a case-by-case basis, use a time period shorter than five days to determine the "market price" for the purposes of pricing securities (including warrants) for private placements. The definition of "market price" in the Manual provides that the five-day VWAP of listed securities should be used to determine market price, but in certain exception circumstances, the five-day VWAP may not accurately reflect the securities' current market price and the TSX may adjust the VWAP.

Securityholder Approval – Financial Hardship Exemption

The Staff Notice reminds issuers that Section 604(e) of the Manual provides an exemption from securityholder approval requirements for issuers experiencing serious financial difficulty. The Staff Notice advises that the TSX recognizes that issuers should be able to enter into transactions in a timely manner when faced with financial difficulty.

Highlights

  • TSX temporarily suspends certain restrictions for normal course issuer bids and temporarily extends the time period provided to issuers under the TSX's remedial review process
  • The temporary relief expires on March 31, 2009, unless extended

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