TSX Adopts Final Updates for Corporate Governance and Security-Based Compensation Disclosure

On October 19, 2017, the Toronto Stock Exchange (the TSX) adopted amendments to the TSX’s Company Manual, which were approved by the Ontario Securities Commission. These amendments encompass changes to corporate governance disclosure requirements and the disclosure of security-based compensation, and include four key changes to the manual, which are:

  1. New website governance disclosure requirements
  1. Changes to the required disclosure items
  2. New burn-rate and disclosure requirements
  3. Changes to the effective date of security-based compensation disclosure

Companies listed on the TSX will need to review these changes carefully to understand the impact on their disclosure processes.

Full details of the approved amendments can be found here.



As part of the announced amendments, the TSX has created a new section in the manual, Section 473, which requires all listed issuers, other than those who are exempt, to post the following governance documents on their publicly accessible website:

  1. The articles of incorporation, amalgamation, continuation or any other constating or establishing documents of the issuer and its by-laws; and
  2. If adopted, copies of the issuer’s
  • majority voting policy,
  • advance notice policy,
  • position descriptions for the chairman of the board, and the lead director,
  • board mandate, and
  • board committee charters.

Section 473 also has requirements on how the above documents must be disclosed:

  1. Webpages containing the documents must be easily identifiable and accessible from the listed issuer’s home page or investor relations page.
  2. If issuers share a website with other issuers, each issuer should have a separate, dedicated page for their required documents.
  3. If the required disclosure is included in a larger document, issuers can comply with the requirements by posting the current, effective version of the larger document.

Not all issuers are required to comply with Section 473. Eligible interlisted issuers, eligible international interlisted issuers and non-corporate issuers are not required to post their applicable governance documents on their websites.

Section 473 comes into effect for the covered TSX listed issuers on April 1, 2018.


The amendments adopted make several changes to Section 613 of the manual. These changes include clarifications and revisions regarding the disclosure items for security-based compensation plans, the effective date of security-based compensation disclosure, and the creation of a new sub-section, Section 613(p), which details new burn-rate calculation and disclosure requirements.


As part of the changes to Section 613, the TSX has clarified and updated the disclosure requirements for all security-based compensation arrangements* and now requires issuers to disclose:

  • PLAN MAXIMUM – the maximum number of securities issuable under each arrangement expressed as a fixed number (together with the percentage this number represents relative to the number of issued and outstanding securities of the listed issuer) or fixed percentage of the number of issued and outstanding securities of the listed issuer,
  • OUTSTANDING SECURITIES AWARDED – the number of outstanding securities awarded under each arrangement, together with the percentage this number represents relative to the number of issued and outstanding securities of the listed issuer, and
  • REMAINING SECURITIES AVAILABLE FOR GRANT – the number of securities under each arrangement that are available for grant, together with the percentage this number represents relative to the number of issued and outstanding securities of the listed issuer.

In addition, issuers must now disclose the vesting and term of all types of security-based compensation plans, and not just for stock options.

*Security-based compensation arrangements are, generally, any compensation or incentive mechanism involving the issuance or potential issuance of securities of the listed issuer.


The new section 613(p) in the TSX Company Manual requires listed issuers to disclose the annual burn rate for security-based compensation arrangements for each of the listed issuer’s three most recently completed fiscal years. If a given arrangement (including predecessor arrangements that were similar) has not existed for three fiscal years, or was approved by security holders within the last three years, listed issuers must disclose the annual burn rate for each completed fiscal year since the arrangement was adopted. No burn rate disclosure is required for the first fiscal year of a newly adopted arrangement. However, if the new arrangement has been adopted to replace a similar arrangement, then disclosure is required.

For the purposes of disclosing the annual burn rate, issuers must use the following calculation:

Number of securities granted under the arrangment during the applicable fiscal year divided by weighted average number of securities outstanding for the applicable fiscal year

If an arrangement includes a multiplier feature that can change the number of securities granted, issuers must provide a narrative description of the multiplier and how it works.


* Securities awarded under an arrangement include, but are not limited to, options, performance stock units, deferred stock units, restricted stock units or other similar awards.

** The weighted average number of securities outstanding during the period is the number of securities outstanding at the beginning of the period, adjusted by the number of securities bought back or issued during the period multiplied by a time-weighting factor. This factor is the number of days that the securities are outstanding as a proportion of the total number of days in the period; a reasonable approximation of the weighted average is adequate in many circumstances. The weighted average number of securities outstanding is to be calculated in accordance with the CPA Canada Handbook.


Finally, the updated TSX Company Manual changes the effective date of security-based compensation disclosure for annual meetings.

For annual meetings, all disclosure on security-based compensation arrangements, with the exception of disclosure for the annual burn rate, must now be presented as of the end of the issuer’s most recently completed fiscal year. Previously, disclosure on security-based arrangements had to be presented as of the date of the meeting materials for annual meetings.

For meetings other than annual meetings where security holder approval is being sought regarding a security-based compensation arrangement matter, disclosure on security-based arrangements must be presented as of the date of the meeting materials.

The amendments relating to the disclosure of security-based compensation will become effective for TSX listed issuers for fiscal years ending on or after October 31, 2017.