TSX Considers Securityholder Approval Requirements For Acquisitions

The Toronto Stock Exchange has requested comments on its securityholder approval requirements for acquisitions by listed issuers.

TSX rules currently require shareholder approval where securities of a listed issuer will be issued as consideration for an acquisition and the number of securities to be issued exceeds 25% of the outstanding securities of the issuer. However, this requirement does not apply where the listed issuer is acquiring a public company, except in certain cases where securities are being issued to insiders, or where the issuance would result in a change of control of the listed issuer.

The TSX is now considering whether securityholder approval should be required more generally for the issue of securities as consideration for the acquisition of a public company; if so, what the appropriate level of dilution should be in order to trigger that approval; and what the required securityholder approval level should be.