The Ontario government, the CSA, the Toronto Stock Exchange, the TSX-Venture Exchange, the Canadian Securities Exchange (CSE) and NEO Exchange (NEO) have all acknowledged that the COVID-19 outbreak presents significant challenges for market participants, including reporting issuers, in meeting obligations under corporate legislation, Canadian securities legislation or TSX, TSX-V, CSE or NEO rules. These obligations include the delivery, filing or sending of disclosure documents, holding annual shareholder meetings, and other matters that have been affected by market impacts such as TSX rules on normal course issuer bids (NCIBs) and delisting criteria. The following is a summary of the relief issued to date.
Relief under the Business Corporations Act (Ontario)
In an effort to support Ontario business corporations an emergency order was made that allows corporations subject to the OBCA to hold meetings of directors, shareholders, and members virtually (i.e., electronically or by telephone) and suspends the timeframe by which corporations governed by the legislation must hold annual general meetings in certain circumstances (Regulation 107/20 under the Emergency Management and Civil Protection Act
(Ontario)). This emergency order is retroactive to March 17, 2020.
Canadian securities law relief
The temporary relief provides a blanket 45-day extension from existing deadlines for periodic filings required to be made by issuers on or before June 1, 2020, including annual financial statements, MD&A, annual information forms, executive compensation disclosure for those who do not file an AIF and prescribed reserve and technical reports.
In order to rely on the exemption, issuers must as soon as practicable in advance of the existing filing deadline issue and file a press release on SEDAR. The press release must include the following disclosure:
- the particular requirements in respect of which it is relying on the exemption;
- that management and other insiders are subject to an insider trading blackout policy. The issue of material undisclosed information is critical to monitor during the extended filing period;
- the estimated date by which the required disclosure document is expected to be filed or sent and delivered as applicable; and
- an update of any material developments since the date of the annual financial statements or interim financial statements that were previously filed or confirmation there have been no material business developments since that date.
During the extension period, issuers are required to file further updating press releases with prescribed information and within specific timelines.
Where a reporting issuer is required to make a filing in connection with a change of auditors, a change in year end, a change in corporate structure or a business acquisition report, the same 45-day extension will be available provided a press release is filed on SEDAR as soon as practicable in advance of the filing deadline disclosing again the applicable requirement for which it is relying on the timing extension.
The 45-day filing extension also applies in respect of certain continuous disclosure requirements relating to exempt distributions (for example, the offering memorandum exemption) provided a press release is filed on SEDAR as soon as practicable in advance of the filing deadline disclosing again the applicable requirement for which it is relying on the timing extension, and certain other prescribed information.
If a final base shelf prospectus has a lapse date during the period from March 23, 2020, to June 1, 2020, an issuer may add 45 days to that lapse date provided it issues and files as soon as practicable in advance of the lapse date a press release that discloses the requirements for which it is relying on exemption and provided it is not relying on the extended filing exemption for continuous disclosure documents (including financial statements and MD&A) set out above.
Relief for TSX-listed issuers
The TSX has provided relief for issuers with respect to financial statements, annual meetings, approval of security-based compensation arrangements, NCIBs, and certain delisting criteria provided for in the TSX Company Manual (the TSX Manual). Unless the relief is stated to be discretionary on a case-by-case basis, issuers do not need to apply to the exchange to rely on the relief.
The TSX is providing issuers relief from the prescribed time limits for filing or mailing financial statements. TSX issuers will not be required to notify the exchange if they require time to file either their annual or interim statements. The TSX expects listed issuers to comply with the Canadian securities relief described above.
Timing of annual meetings:
Regardless of its financial year end, a TSX issuer may hold its annual meeting any time up to and including December 31, 2020, as opposed to the current requirement to hold within six months of its year end.
Approval of security-based compensation arrangements:
TSX issuers who are due to obtain security holder approval of unallocated options, rights or other entitlements under a security-based compensation plan or who wish to modify such a plan may coordinate the timing of such approval with the timing of their 2020 annual meeting. Awards granted during this timeframe may be exercised absent security holder ratification.
Normal course issuer bids:
In response to depressed securities prices, the TSX is providing issuers who are making NCIBs with relief from the volume of purchases condition. From March 23, 2020, to June 30, 2020, the volume of purchases condition has been modified to provide that NCIB purchases must not exceed 50% of the average daily trading volume of the listed securities of that class (as opposed to the greater of 25% and 1,000 securities). Issuers should be cognizant when considering an NCIB whether it is in possession of material undisclosed information in light of the Canadian securities relief described above.
From March 23, 2020, to December 31, 2020, the TSX will not apply certain delisting criteria regarding market capitalization when determining whether to initiate a delisting review of an issuer’s securities. All other provisions regarding delisting, including the expedited review process and the delisting criteria, remain unaltered.
“Market Price” definition:
The TSX is providing issuers with relief on a case-by-case basis from the definition of “market price” in light of current market volatility.
On April 3, the CSA issued Staff Notice 51-360 setting out responses to some frequently asked questions about the foregoing. The CSA reminds issuers to refer to the applicable local blanket orders that have been issued by the provincial principal regulators.
Relief for TSX-V-listed issuers
The TSX-V has provided issuers with relief from the shareholder meeting and stock option plan approval provisions. Issuers do not need to apply to the exchange to rely on the relief.
The TSX-V is providing issuers with relief from the prescribed time period and issuers may hold annual meetings up to and including December 31, 2020.
Stock option plans:
The TSX-V is providing issuers who are due to approve existing or new rolling stock option plans with relief from the annual approval requirement. Issuers may coordinate such approval with its 2020 annual meeting.
Relief for CSE-listed issuers and certain guidance
The CSE has clarified that any relief granted by the CSA will apply to listed issuers, including the relief from applicable securities laws described above.
The CSE has confirmed listed issuers are to continue filing financial statements and related CSE forms on SEDAR, or in accordance with securities legislation and has reminded its listed issuers to continue to comply with their obligations under the CSE Exchange Policy, including making timely disclosure and filing monthly progress reports.
The CSE has also provided guidance to listed issuers on certain upcoming disclosures associated with the impact of COVID-19 and has outlined a number of specific examples and general considerations for issuers to include in their MD&A.
Relief for NEO-listed issuers
NEO has stated that it will treat any requirement of the NEO Listing Manual that mirrors securities law requirements to be met so long as the listed issuer is relying on relief granted by the Canadian securities regulatory authorities, such as the Canadian securities relief described above.
NEO has stated that listed issuers are to continue to comply with all requirements of the NEO Listing Manual and has also indicated it will continue to follow up on timely disclosure notices, but will delay taking any remedial actions for other non-compliance matters.