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Canadian Coalition for Good Governance Releases 2013 Executive Compensation Principles

The Canadian Coalition for Good Governance (“CCGG”) recently released its 2013 Executive Compensation Principles (the “2013 Principles”), replacing the previous version originally published in 2009. The original principles were designed to provide enhanced guidance to boards and to promote compensation decisions aligned with long-term company and shareholder success. According to the CCGG, the 2013 Principles offer an updated take on the principles set forth in the original report to reflect the continued evolution of both compensation practices and regulatory disclosure requirements.

According to the CCGG, the 2013 Principles focus on the concept of “pay for performance” and “the integration of risk management functions into executive compensation philosophy and structure”. The 2013 Principles are organized around six key principles:

1) A significant component of executive compensation should be “at risk” and based on performance.

2) “Performance” should be based on key business metrics that are aligned with corporate strategy.

3) Executives should build equity in the company to align their interests with those of shareholders.

4) A company may choose to offer pensions, benefits and severance and change-of control entitlements. When such perquisites are offered, the company should ensure that the benefit entitlements are not excessive.

5) Compensation structure should be simple and easily understood by management, the board and shareholders.

6) Boards and shareholders should actively engage with each other and consider each other’s perspective on executive compensation matters.

The CCGG notes that while Canadian disclosure obligations regarding executive compensation are limited to the “top five” executives at a company, boards should ensure that the above principles are used in determining company-wide compensation philosophy and structure.

Canadian Coalition for Good Governance Releases 2013 Executive Compensation Principles

TSX-V Extends Temporary Relief Measures for Private Placements

As recently announced in a Corporate Finance Bulletin and Notice to Issuers (the “Bulletin”), the TSX Venture Exchange (“TSX-V”) has extended until April 30, 2013 three temporary measures (the “Relief Measures”) designed to provide relief to issuers from certain pricing requirements relating to private placement financings. The Relief Measures, originally implemented in August 2012, are as follows:

1) Allowing a share/unit offering with an offering price below $0.05.

2) Allowing a debenture offering with a debenture conversion price below $0.10.

3) Allowing offerings involving a warrant with an exercise price below $0.10.

In order to rely on the Relief Measures, an issuer must demonstrate that it is subject to immediate or imminent financial hardship and that it does not have the time or resources to undertake a share consolidation before closing the financing. In addition, the principal use of proceeds of the financing must be to maintain or preserve the existing business of the issuer and none of the proceeds may be used to compensate or satisfy obligations to related parties of the issuer.

The Bulletin includes an amendment to the originally-implemented Relief Measures by introducing the concept of an “Excluded Amount” with respect to financings with a share/unit offering price below $0.05 or a debenture conversion price below $0.10. The amended Relief Measures provide that up to $50,000 of the gross proceeds raised in a financing in reliance on the Relief Measures can be used for general working capital purposes and is not subject to the “Maintain/Preserve Existing Business” and “No Payments to Related Parties” conditions noted above.

Specifics of the requirements and conditions associated with use of the Relief Measures are detailed in the Bulletin.

TSX-V Extends Temporary Relief Measures for Private Placements

TSX Provides Guidance on Normal Course Issuer Bids

On June 8, 2012, the Toronto Stock Exchange (“TSX”) published a staff notice (the “Notice”) aimed at providing guidance to issuers and capital market participants on the use of block purchase exemptions and securities purchased in error under a normal course issuer bid (“NCIB”).

Subsection 629(l)(7) of the TSX Company Manual (the “Manual”) sets out what is commonly referred to as the “block purchase exemption”, which allows an issuer to make one purchase per calendar week which exceeds the daily repurchase restriction. In the Notice, TSX staff raise concerns about the practice by some dealers of bundling pre-existing blocks to sell into one purchase order under an NCIB. In the view of TSX staff, the combination of pre-existing blocks is considered inappropriate and inconsistent with the exception, as such practice allows an issuer to exceed the “one block per week” limitation. The Notice reminds issuers that the block purchase exception was created to allow an issuer to repurchase a large naturally-occurring block on the market, particularly in the case of illiquid securities.

The Notice also confirms that securities purchased in error under an NCIB which are taken into inventory by the buying broker firm may not be resold into an NCIB, as such trades would be considered to be pre-arranged trades, contrary to subsection 629(l)(2) of the Manual. The Notice suggests that one way for dealers to ensure that such securities are not resold into an NCIB is to temporarily cease purchases under an NCIB during resale of such securities.

 

TSX Provides Guidance on Normal Course Issuer Bids