TSX to Closely Scrutinize Options Granted During Blackout Periods

The Toronto Stock Exchange Company Manual has long contained a prohibition against listed companies setting option exercise prices, or prices at which securities may otherwise be issued, at market prices that do not reflect undisclosed material information. TSX staff recently issued a notice reminding companies of this prohibition, but the notice also suggests that the TSX is very leery of options that are granted during blackout periods (or, for companies that use trading windows, outside those windows). That is, the notice "cautions listed issuers about granting options during a blackout period, whether or not the blackout period is directly related to the material undisclosed event."

Blackout periods vary, and represent the approximate periods when a company might possess undisclosed material information. If the company is satisfied that no material undisclosed information exists and appropriate internal approvals are obtained, we think that the mere existence of a blackout period