TSX Proposes Additional Flexibility for Public Company Acquisitions

The Toronto Stock Exchange (TSX) is proposing to amend the requirement for security holder approval in connection with a dilutive acquisition by a listed issuer of a target public company. The proposed amendment would permit a TSX-listed issuer to increase the number of its securities issuable to target company security holders by up to an additional 25% of the approved fixed number of securities without seeking further approval. The TSX believes this amendment will provide welcome flexibility to an issuer that needs to increase the consideration offered in an acquisition for a target public company in response to a competing bid or other market developments.


Currently, TSX policies require a listed acquirer to obtain the approval of its own security holders for the issuance of more than 25% of the acquirer’s listed issued and outstanding securities in connection with an acquisition of a target public company. The approval must be in respect of a fixed maximum number of securities. An acquirer is not permitted to issue a number of securities in excess of the approved maximum number of securities without obtaining further security holder approval. As a practical matter, acquirers will not request approval for more securities than the number contemplated by a publicly announced acquisition since to do so would signal a willingness to increase the consideration being offered.

Proposed Amendments

The TSX has published for comment proposed amendments which would permit an acquirer to issue up to an additional 25% of the fixed number of securities previously approved for issuance by the acquirer’s security holders without seeking further security holder approval. The amendments will become effective upon the TSX publishing a final amended Staff Notice.

Request for Comments

Comments should be submitted to the TSX in writing and delivered by July 16, 2018.

DISCLAIMER: This post is intended to convey general information about legal issues and developments as of the date above. It does not constitute legal advice and must not be treated or relied on as such.