Tuesday May 3 2016

News Source: Global Exchanges

Focus: Trading Rules

Type: General




Toronto Stock Exchange (TSX) has published proposed amendments to introduce TSX requirements regarding Dividend / Distribution Reinvestment Plans (DRIPs) in Part VI of the TSX Company Manual.  The proposed amendments provide for public interest changes and ancillary changes.

Summary of the Proposed Amendments

TSX is proposing a new Section 617.1 to explicitly set out the requirements regarding DRIPs in the Manual. As ancillary matters, the Exchange is also proposing to amend Section 329—Outstanding and Employee Incentive Plans, Section 423.12—Electronic Communications Guidelines and Part XI of the Manual.

The new Section 617.1 will provide for the following:

Implementing a DRIP

Listed issuers will be required to pre-clear any new DRIPs that provide for the issuance of additional listed securities from treasury. Section 617.1 sets out the documentation required for TSX to finalize the acceptance of the plan and list the additional securities issuable under the DRIP once it has been approved by the listed issuer`s board of directors.

Requirements Applicable to DRIPs

New requirements will be introduced that specifically apply to DRIPs, as follows:

  • the price at which securities can be issued under a DRIP must not be lower than the market price, less a 5% discount;
  • the maximum number of additional securities that can be listed under a DRIP;
  • all security holders in Canada must be eligible to participate in the DRIP; and
  • DRIPs must include a provision to pre-clear all amendments with TSX.

Listing Additional Securities under an Existing DRIP

Listed issuers must have a sufficient number of securities listed to cover issuances under a DRIP, including pursuant to optional cash payments. This section also specifies the process and documentation required to list additional securities under an existing DRIP.

Amending a DRIP

Listed issuers must pre-clear any amendments with TSX. This section also specifies the documentation required to obtain TSX approval for amendments.

Suspending or Terminating / Resuming or Re-instating a DRIP

Listed issuers wishing to suspend or terminate a DRIP must promptly notify TSX and advise their security holders by way of issuing a news release. The same procedure applies when an issuer wants to resume or re-instate a DRIP.

TSX is publishing the Amendments for a thirty (30) day comment period, which expires May 28, 2016. The Amendments will only become effective following public notice and the approval of the OSC.

Click on the link above for further details.