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Location: TSX Company Manual > Staff Notices to Applicants, Listed Issuers, Securities Lawyers and Participating Organizations > 2008 > 2008-0006

2008-0007

2008-0005

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(1 version)

Nov 24 2008 onwards

2008-0006

November 24, 2008

Sections 634–636
Securityholder Rights Plans
Section 431
Special Year-End Distributions by Trusts

STAFF NOTICE TO APPLICANTS, LISTED ISSUERS, SECURITIES LAWYERS AND PARTICIPATING ORGANIZATIONS

Toronto Stock Exchange ("TSX") staff is providing guidance on:

1. The adoption by listed issuers of securityholder rights plans ("plans") with certain features. In particular, TSX has recently received applications for the adoption of plans with triggering thresholds of less than 20%; and

2. Special year-end distributions by income trusts and other similar non-taxable entities (collectively, the "Trusts").

Triggering Threshold for Securityholder Rights Plans

TSX generally expects plans to have a triggering threshold of 20%, consistent with take-over bid requirements under Canadian securities legislation. The adoption of plans with triggering thresholds of less than 20% will be considered by TSX in accordance with Sections 634 through 636 of the TSX Company Manual (the "Manual") and the following guidelines:

1. When filing the plan with TSX, the issuer must provide a thorough rationale and explanation with respect to why it is necessary that the plan have a triggering threshold of less than 20%.

2. TSX will defer its review of, or decision to consent to, a plan if it appears that the plan is being implemented as a tactical or defensive strategy. When filing the plan with TSX, issuers must disclose knowledge of events such as an upcoming proxy contest or an acquisition/disposition of a block of securities above the triggering threshold.

3. TSX will defer its review of, or decision to consent to, a plan if the issuer does not intend to seek securityholder approval for the plan. In such instance, TSX will not consent to the adoption of another plan until the earlier of: (i) three years after the initial plan was adopted by the issuer; or (ii) securityholder approval is obtained for the plan. TSX will also consider deferring its review of, or decision to consent to, a plan if it appears likely that securityholders will not approve a plan.

4. TSX reminds listed issuers that adopt plans without pre-clearance from TSX that, pursuant to Subsection 635(b)(i) of the Manual, they must publicly announce that the adoption of the plan is subject to TSX acceptance. In addition, if TSX defers its review of, or decision to consent to, a plan, listed issuers must publicly announce TSX's decision to defer. In the press release, the issuer must disclose if the plan has a triggering threshold of less than 20%, and provide an explanation with respect to why it is less than 20%. Please also refer to Staff Notice 2006-0002 in respect of Subsection 635(b)(i)—Public Announcement of the Adoption of Securityholder Rights Plans.

If you have any questions about this Staff Notice, please contact you listings manager.

SECTION 431: SPECIAL YEAR-END DISTRIBUTIONS BY TRUSTS

TSX staff reminds its issuers that TSX must be provided with notification of a distribution (including a dividend) declaration immediately following the board of directors (or equivalent body) meeting at which the decision to declare the distribution is made. In any event, a notice in the form of a Form 5: Dividend/Distribution Declaration ("Form 5") must be filed at least seven (7) trading days prior to the record date. Form 5 must be filed using TSX SecureFile. Reference is made to Sections 428 to 435.2 of the Manual for additional details regarding dividends and other distributions to security holders.

This minimum seven (7) trading day notification period applies to all distributions, including special year-end distributions by Trusts, whether or not:

1. the exact amount of the distribution known;

2. the distribution is to be paid in cash, trust units and/or other securities; or

3. if the distribution is to be paid in securities, the securities to be distributed are immediately consolidated after the distribution, resulting in no change to the number of securities held by security holders.

Where the exact amount of the distribution is unknown, issuers should provide, at the time they file their Form 5, their best estimate of the anticipated amount of the distribution and indicate that such amount is an estimate. Details regarding the payment of the distribution in cash, trust units and/or other securities and whether such securities will be immediately consolidated must be provided. Upon determination of the exact amount of any estimated distribution, the issuer must disseminate the final details by news release and provide TSX's Dividend Administrator with a copy of the news release, by email or fax.

Sections 428 to 435.2 of the Manual also apply to distributions paid entirely in securities which are immediately consolidated following the distribution, resulting in no change to the number of securities held by security holders. Such distributions may have tax consequences for security holders, which could impact the market price of the securities. Accordingly, TSX will publish a bulletin containing details of any such distribution. The following additional documentation will be required for such transactions: (i) a certified copy of the directors resolution, or equivalent document, effecting the distribution and consolidation; (ii) a certified copy of the amendment to the articles (if applicable); (iii) confirmation there will be no change in CUSIP number as a result of the consolidation; (iv) opinion of counsel that the distribution and consolidation has been effected in accordance with the articles and applicable legislation; and (v) a filing fee (an invoice will be sent to the issuer).

TSX staff further reminds its issuers that notices of any distributions, other than those solely payable in cash, should also be filed with the appropriate Listed Issuer Services Manager, in addition to the TSX Dividend Administrator.

Issuers may refer to the following link to find their Listed Issuer Services Manager: http://www.tsx.com/en/listings/contact.html. The TSX Dividend Administrator, Kay Dhanraj, can be reached at (416) 947-4663 or kay.dhanraj@tsx.com.

November 24, 2008.

2008-0007

2008-0005