Location: TSX Company Manual > Part VI Changes in Capital Structure of Listed Issuers > D. Rights Offerings > Sec. 614.

D. Rights Offerings E. Additional Listings

Sec. 614.

(a) A preliminary discussion with TSX is recommended to a listed issuer proposing to offer rights to its participating security holders.
(b) A rights offering by a listed issuer must be accepted for filing by TSX before the offering proceeds. The offering must also be filed with the securities commissions having jurisdiction (see section 2.1 of National Instrument 45-106).

The rights offering must receive final acceptance from TSX at least five trading days in advance of the record date for the rights offering, the record date being the date of the closing of the transfer books for the preparation of the final list of participating security holders who are entitled to receive rights.

A listed issuer may not announce a firm record date for a rights offering before all necessary approvals have been received.
(i) A draft copy of the rights offering notice (Form 45-106F14) together with the rights offering circular or the preliminary prospectus for the rights offering, as applicable, must be filed with TSX in sufficient time for TSX to review the mechanics, pricing and timing of the rights offering in order to maintain an orderly market. TSX will subsequently advise the listed issuer of any deficiencies in the rights offering circular or the preliminary prospectus for the rights offering, as applicable, and of the further documentation that will be required.
(ii) Securities offered by way of rights offering are expected to be offered at a "significant discount" to market price at the time of pricing of the offering, which is expected to be at the time of filing of the rights offering circular or the (final) prospectus for the rights offering (the “Rights Offering Documents"), as applicable. A significant discount would be equal to at least the maximum discount to market price allowed for private placements as set forth in Subsection 607(e).

If a third party ("backstop") has agreed to subscribe for securities which are not otherwise subscribed for under the rights offering, and there is not a significant discount, TSX will require security holder approval if the rights offering could result in a material effect on control of the listed issuer.

Backstop fees payable in cash are acceptable to TSX provided the fees are commercially reasonable. Backstop fees payable in securities are acceptable to TSX for arm's length parties as a securities for debt transaction under Section 607 and provided that the fees are commercially reasonable. Backstop fees payable in securities to non-arm's length parties are considered security-based compensation arrangements and security holder approval is therefore required to be obtained at the next meeting.
(d) If the rights offering is being conducted by way of a prospectus offering and the rights offering is acceptable to TSX (subject only to the correction of minor deficiencies, if any, and the filing of the required documents), TSX will provide written communication to the listed issuer to that effect so that the listed issuer can deliver that written communication to the relevant securities commissions.
(e) At least five trading days in advance of the record date:
(i) all deficiencies raised by TSX must be resolved;
(ii) all the terms of the rights offering must be finalized; and
(iii) TSX must receive all requested documents, including a copy of the Rights Offering Documents.
(f) There is no fee for the listing of rights on TSX, although there is a fee for listing securities issuable upon exercise of the rights. If such securities are of a class already listed, the listed issuer must list the maximum number of securities issuable under the rights offering. However, upon receipt of notification of the actual number of underlying listed securities issued pursuant to the rights offering, TSX will invoice the issuer for the number of securities issued and issuable upon exercise of the rights.
(g) The information that must be contained in the Rights Offering Documents is prescribed in the rules and policies of the securities commissions. TSX may have additional requirements, depending on the circumstances.
(h) The standard notation on (final) prospectuses or other offering documents referring to conditional approval of a listing is not appropriate for a Rights Offering Document with respect to the rights themselves, nor is such notation appropriate with respect to the securities issuable upon exercise of the rights if such securities are of a class already listed. The rights will normally be listed on TSX, as will the underlying securities (if of a class already listed), before the applicable Rights Offering Document is mailed to the participating security holders.
(i) Rights which receive all required approvals will be automatically listed on TSX if the rights entitle the holders to purchase securities of a listed class. Rights which do not fall into this category will also normally be listed on TSX at the request of the listed issuer. If rights issued to security holders of a listed issuer entitle the holders to purchase securities of another issuer which is not listed, the rights will not be listed on TSX unless such securities have been conditionally approved for listing on TSX.
(j) Rights are listed on TSX at the opening of trading on the first trading day preceding the record date. At the same time, the underlying listed securities of the listed issuer commence trading on an ex-rights basis, which means that purchasers of the listed securities at that time are not entitled to receive the rights. Due Bill trading may be used in certain circumstances for conditional rights offerings as determined at the discretion of the Exchange. See Section 429.1.
(k) When the rights certificates are mailed to the participating security holders, the listed issuer must concurrently file with TSX a definitive specimen of the rights certificate.
(l) Trading in rights on TSX ceases at 12:00 noon on the expiry date.
(m) TSX requires that rights be transferable. Any proposed restriction on the transfer of unlisted rights must receive the prior consent of TSX.
(n) The following requirements apply to rights which are listed on TSX, although TSX may, in appropriate circumstances, apply these requirements to rights not so listed:
(i) once the rights have been listed on TSX, TSX will not permit the essential terms of the rights offering, such as the exercise price or the expiry date, to be amended. However, under extremely exceptional circumstances, such as an unexpected postal disruption, TSX may grant an exemption from the requirement that the expiry date not be extended;
(ii) the rights offering must be open for a period of at least twenty-one (21) calendar days following the date on which the Rights Offering Document is sent to participating security holders;
(iii) participating security holders must receive exactly one right for each security held. An exemption from this requirement will be considered if the rights offering entitles participating security holders to purchase more than one security for each security held (prior to giving effect to any additional subscription privilege); and
(iv) if the listed issuer proposes to provide a rounding mechanism, whereby participating security holders not holding a number of securities equally divisible by a specified number would have their entitlements adjusted upward, adequate arrangements must be made to ensure that beneficial owners of securities registered in the names of CDS, banks, trust companies, investment dealers or similar institutions will be treated, for purposes of such additional entitlements, as though they were registered participating security holders.
(o) As soon as possible after the expiry of the rights offering, the listed issuer must advise TSX in writing of the number of securities issued as a result of the rights offering, including securities issued pursuant to any underwriting or similar arrangement.

D. Rights Offerings E. Additional Listings

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