Information on legal and business topics from Canadian business lawyer Shane McLean

TSX To Require Shareholder Approval of Public Company Acquisitions

Posted by Shane McLean on September 28, 2009

The TSX manual, applicable to companies listed on the Toronto Stock Exchange, currently requires that a listed company obtain approval from its shareholders if it intends to complete an acquisition of another company and, in the course of that acquisition, intends to issue shares representing more than 25% of its currently outstanding shares.  Since 2005 there has been an exemption to that shareholder approval requirement when a TSX listed company was acquiring another public company.   On September 25, 2009 the TSX announced that this exemption will be removed effective as of November 24, 2009.

After November 24, 2009 all acquisitions which involve the issuance of shares representing more than 25% of a TSX listed company’s currently outstanding shares will require shareholder approval.

The amendment follows a public consultation process initiated in October of 2007, which at one point saw the TSX propose a new 50% threshold for public company acquisitions.  According to the TSX, a majority of the submissions received were in favour of eliminating the exemption and in favour of applying the same 25% threshold to both private and public company acquisitions.


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