On the heels of recent amendments by the Canadian Securities
Administrators (CSA), the Toronto Stock Exchange (TSX) has issued
guidance to issuers on rights offerings.
The TSX announced that: (i) despite the CSA amendments, rights
offering documents must still be pre-cleared with the TSX; and (ii)
the advance notification period to set a record date is reduced to
five days, from seven days. The TSXV issued similar guidance
that addresses some additional issues.
Interestingly, the TSX did not address whether shareholder
approval would be required for rights offerings which result in
dilution in excess of 25% – shareholder approval is typically
required for private placements resulting in dilution over
25%. However, we do not expect that shareholder approval for
a rights offering would be required by the TSX in such
circumstances so long as dilution is below 100%, as permitted by
the new rights offering prospectus exemption.
