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15 August 2006
The Toronto Stock Exchange (TSX) has issued a notice of importance to listed issuers that have security-based compensation plans or are proposing security-holder rights plans.
The notice reminds listed issuers with security-based compensation plans (eg, stock option plans with no fixed number of issuable securities), which automatically 'reload' upon exercise, that they must receive security-holder approval for their plans every three years. In particular, the TSX has advised listed issuers that for the purpose of obtaining such approval, broadly cast amendments will not suffice. Security holders must pass a resolution specifically approving unallocated entitlements under the plan and identify the next date (within three years) by which the listed issuer will seek approval for subsequent renewal. If approval is not obtained within the three years, all unallocated entitlements will be cancelled and may not be granted until the approval is obtained.
The TSX advises listed issuers that adopt security-holder rights plans (or 'poison pills') without TSX pre-clearance that they must publicly announce that the adoption of the rights plan is subject to TSX approval. In addition, if the TSX decides to defer its review of or decision to consent to a plan, pending its consideration by the appropriate securities commission or otherwise, the listed issuer must publicly announce the TSX's decision to defer. Disclosure should also be made when the TSX has made a decision to consent to or reject the adoption of a rights plan.
The notice also reminds individuals who have received a pardon under the Criminal Records Act (Canada) of their disclosure obligations when completing a personal information form for the TSX. Such individuals must disclose that a pardon has been granted on a certain date and provide details of the pardoned offence in an attachment to the personal information form.
For further information on this topic please contact Paul Goldman or David Redford at Goodmans LLP by telephone (+1 604 682 7737) or by fax (+1 604 682 7131) or by email (firstname.lastname@example.org or email@example.com).
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Paul L Goldman