On October 19, 2017, the Toronto Stock Exchange (TSX) announced it had adopted amendments to its Company Manual. Originally proposed in Spring 2016, and one aspect of public company corporate governance that was up for change in 2017, the amendments recognize two significant business trends: the increasing role of the Internet as an information source for current and prospective investors, and use of security-based compensation as a tool to attract and retain talent. The amendments will enhance governance disclosure for TSX-listed companies in relation to these trends by introducing new website disclosure requirements, and updating disclosure requirements for security-based compensation arrangements. Here are the key elements of both.


As Canadian securities regulators address reporting issuers' compliance with their disclosure requirements when using social media, the TSX Company Manual's new section 473 similarly recognizes the pervasive role of technology, and in particular the Internet, both as a source of information for security-holders and prospective investors and as a tool by which companies communicate with those investors and the public generally.

What. TSX-listed issuers will now be required to post current copies of these corporate governance documents:

  • Its constating documents (articles of incorporation, amalgamation, continuation or any other documents that establish the issuer) and its bylaws.
  • If adopted, its:
    • Majority voting policy (which the issuer will no longer have to describe in its management information circulars).
    • Advance notice policy.
    • Position descriptions for the board chair and the lead director.
    • Board mandate.
    • Board committee charters.

Where. Issuers must post the documents on a publicly accessible website, and on a page that's easily identifiable and accessible from its home page or investor relations page. Issuers that share a website should each have a separate, dedicated webpage to meet these requirements.

Who. All TSX-listed issuers must comply except three categories exempted from the disclosure requirements:

  • Eligible Interlisted Issuers. TSX-listed issuers that are also listed on another TSX-recognized stock exchange (New York Stock Exchange, NYSE MKT, NASDAQ, London Stock Exchange Main Board, AIM, Australian Securities Exchange, Hong Kong Stock Exchange Main Board or others the TSX recognizes) and that had less than 25% of the overall trading volume of their listed securities occurring on all Canadian marketplaces in the preceding 12 months.
  • Eligible International Interlisted Issuers. Eligible Interlisted Issuers organized in a TSX-recognized jurisdiction (including Australia, England, Hong Kong, the State of Delaware, and others the TSX recognizes).
  • Non-Corporate Issuers. These include issuers of certain exchange-traded products, closed-end funds and structured products traded on the TSX.

When. The new website disclosure requirements are effective as of April 1, 2018.


Companies – from start-ups to large, long-established ones – are increasingly using a variety of security-based compensation arrangements to attract and retain talent. Reflecting this trend, the Company Manual amendments expands and updates the existing disclosure obligations relating to security-based compensation arrangements.

What. There are three key changes to security-based compensation arrangement disclosure:

  • Expanded Vesting and Term Disclosure. Vesting and term of grant disclosure now applies to all security-based compensation arrangements – not just to stock options.
  • Burn Rate. Under a new disclosure obligation, issuers must now disclose the annual burn rate for each arrangement it maintains for each of its three most recently completed fiscal years. If the arrangement hasn't existed for the issuer's last three fiscal years (including similar predecessor security-based compensation arrangements), or if security holders approved it within the issuer's last three fiscal years, the issuer should disclose the annual burn rate for each of its fiscal years completed since it was adopted. The disclosure must express the burn rate as a percentage calculated as: the number of securities awarded under the arrangement during the applicable fiscal year divided by the weighted average number of securities outstanding for the applicable fiscal year (calculated per the CPA Canada Handbook). If the securities awarded under the arrangement are subject to a multiplier, the issuer must provide details about the multiplier.
  • Awards Issuable, Outstanding & Available for Grant. The amendments simplify and clarify the requirement to disclose the number of securities outstanding and available under security-based compensation arrangements. The amendments make clear that issuers must disclose all of the following as at the end of the issuer's most recently completed fiscal year for an annual meeting, or as of the date of the meeting materials for any meeting (except an annual meeting) where security holders are asked to approve a matter relating to security-based compensation:  
    • The maximum number of securities issuable under each arrangement, expressed either as: both a fixed number and the percentage relative to the number of the issuer's issued and outstanding securities; or a fixed percentage of the number of the issuer's issued and outstanding securities.
    • The number of outstanding securities awarded under each arrangement and the percentage it represents relative to the issuer's issued and outstanding securities.
    • The number of securities under each arrangement available for grant and the percentage it represents relative to the number of the issuer's issued and outstanding securities.

Where. Issuers must disclose the required security-based compensation information in their management information circulars or other annual disclosure document distributed to all security holders.

When. The security based compensation disclosure amendments are effective for fiscal years ending on or after October 31, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.