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Location: TSX Company Manual > Notices of Approval > Notice of Approval Amendments to Part X of the Toronto Stock Exchange Company Manual (October 4, 2018) > Summary of the Amendments

Reason for the Amendments Summary of the Comments Received

Summary of the Amendments

  Versions
(1 version)
 
Oct 4 2018 onwards
a) Capital Structure & Completion of a Qualifying Acquisition - Redemptions - Sections 1008 and 1027

Section 1008 has been amended to permit a SPAC to limit the maximum redemption rights that may be exercised by shareholders, provided that the limit is not lower than 15% of the shares sold in the initial public offering ("IPO") and that such limitation is disclosed in the IPO prospectus. In addition, Section 1027 has been amended to eliminate the requirement that shareholders vote against a qualifying acquisition in order to have a redemption right. Under the Amendments, all shareholders will have a redemption right (other than founding securityholders in respect of their founding securities) whether or not they vote against a qualifying acquisition, subject to a redemption limit, if imposed.

b) Capital Structure - Warrant Expiry Date - Section 1008(b)(ii)

Section 1008(b)(ii) has been amended to remove the word "fixed" so that a warrant expiry date could be based on the completion of the qualifying acquisition, rather than on a fixed date.

c) Prohibition of Debt Financing - Section 1009

Section 1009 has been amended so that a SPAC may obtain unsecured loans from its founders or their affiliates for amounts up to the equivalent of 10% of the funds held in escrow under Section 1010. The loans would not have any recourse against the escrow funds available for redemption or liquidation and would be limited to amounts as disclosed in the IPO prospectus. Assuming the qualifying acquisition successfully closes, the loans would be repayable by the resulting issuer from the remaining funds released from escrow or otherwise available to the SPAC. In the event that the SPAC is liquidated, the founders (or their affiliates) would have no recourse against the escrowed funds.

d) Public Distribution - Sections 1015 and 1029

Section 1015(c) has been amended to reduce the minimum number of public board lot holders required from 300 to 150.

Following the completion of a qualifying acquisition by a SPAC, the resulting issuer must meet TSX's original listing requirements set out in Part III of the Manual since, effectively, the resulting issuer represents a new listing. These requirements include, among other things, the public distribution requirement set out in Section 315 which requires at least 300 public board lot holders. TSX understands that it has been difficult for SPACs to determine whether they meet the 300 public board lot holder requirement and provide supporting evidence of same upon closing of the qualifying transaction.

As a result, TSX proposed to amend Section 1029 to provide the resulting issuer with up to 90 days from the completion of the qualifying acquisition to provide evidence that it meets the public distribution requirement set out in Section 315. After consideration of comments received in connection with the Request for Comments, TSX amended Section 1029 to provide the resulting issuer with up to 180 days (rather than the 90 days originally proposed) from the completion of the qualifying acquisition to provide evidence that it meets the public distribution requirement set out in Section 315.

e) Other Requirements - Annual Meeting Relief - Section 1021

Section 1021 has been amended to exempt a SPAC from the requirement to hold an annual meeting in accordance with Section 464 and to provide notice and the opportunity to attend and speak at such meetings as required by Section 624(h).

f) Other Requirements - Restricted Share Policy Relief - Section 1021

Section 1021 has been amended to exempt SPACs from the application of: (i) Section 624(l) in respect of takeover protective provisions; and (ii) Section 624(m) in respect of the prohibition on the issuance of shares with greater voting rights than any listed shares. These exemptions would apply to SPACs prior to their qualifying acquisition. Any proposed implementation of a dual class share structure, restricted shares or similar structure at the time of the qualifying acquisition would be reviewed by TSX under Section 624.

g) Shareholder and Other Approvals Requirement - Sections 1024 to 1026 & Prospectus Requirement - Section 1028

Section 1024 has been amended to remove the requirement for shareholder approval for a qualifying acquisition, provided that an amount equal to at least 100% of the gross proceeds raised in the SPAC's IPO are placed in escrow ("100% Escrow Condition"). TSX has also clarified that it will not require shareholder approval for matters related to the qualifying acquisition, such as dilutive transactions or the adoption of a security based compensation arrangement, provided that such matters are disclosed in the prospectus for the resulting issuer and the 100% Escrow Condition is satisfied.

Section 1025 has been amended to require disclosure in the SPAC's IPO prospectus if shareholder approval is a condition of the qualifying acquisition. In the event that such approval is required, the qualifying acquisition must be approved by a majority of the votes cast by securityholders of the SPAC entitled to vote at a duly called meeting. Comprehensive disclosure would be required for all material aspects of the transaction in the prospectus for the resulting issuer, including valuation requirements for non-arm's length transactions as applicable under Part VI of the Manual.

Section 1028 has been amended to require that SPACs mail a notice of redemption to shareholders and make the prospectus for the resulting issuer publicly available on its website at least 21 days prior to the redemption deadline stated in the notice of redemption, and requires delivery of the prospectus to shareholders at least two business days prior to the redemption deadline. After consideration of comments received in connection with the Request for Comments, Section 1028 has been amended to permit a SPACs to deliver the prospectus to shareholders electronically in compliance with National Policy 11-201 - Electronic Delivery of Document ("NP 11-201").

h) Other Administrative Amendments

In connection with the Amendments, TSX has also made certain non-material amendments to clarify various provisions under Part X, and certain ancillary changes as a result of the Amendments. These amendments include, but are not limited to, correcting a typographical error, amending the definition of "founding securities", replacing all references to a conversion right with a redemption right and amending the language to require a redemption right in all instances.


Reason for the Amendments Summary of the Comments Received

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