RE:RE:NCIB Starts Tomorrow S&F You asked why. Highlighted in yellow below
Exchange Limits on NCIBs:
The Toronto Stock Exchange places the following limits on purchases made under NCIBs:
(a) Such purchases may not aggregate more than the greater of:
- 25% of the average daily trading volume of the shares; and
- 1,000 shares; and
(b) Over a 12-month period, commencing on the date specified in the notice of the normal course issuer bid submitted by the company to the TSX, such purchases may not exceed the greater of:
- 10% of the public float (i.e. shares held by persons that are not insiders of the company and are free from resale restrictions), or
- 5% of the outstanding shares;
on the first day of the 12-month period.
The TSX Venture Exchange places the following limits on purchases made under NCIBs:
(a) Such purchases may not exceed 2% of the total issued and outstanding shares outstanding at the time the purchases are made; and
(b) Over a 12-month period beginning on the date specified in the notice of the bid submitted by the company to the TSXV, such purchases may not exceed the greater of:
- 10% of the public float (i.e. shares held by persons that are not insiders of the company and are free from resale restrictions); and
- 5% of that class of shares issued and outstanding;
on the first day of the 12-month period.
Corporate Law Restrictions on Issuer Bids
Under each of the Canada Business Corporations Act (CBCA) and the Alberta Business Corporations Act (ABCA), a corporation shall not make any payment to purchase or otherwise acquire shares issued by it if there are reasonable grounds for believing that:
(a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or
(b) the realizable value of the corporation's assets would after the payment be less than the aggregate of its liabilities and stated capital of all classes.
Most other corporate statutes in Canada have similar provisions.
Typical Process to Launch an NCIB
The following are the typical steps or documents required to implement an NCIB:
- Board Approval: The company must receive the approval of its board of directors for the NCIB.
- Retain Member to Conduct NCIB: The company must retain an exchange member (i.e. broker) to make the purchases under the NCIB.
- Exchange Approval: The company must submit an application to the applicable exchange and receive exchange acceptance of its NCIB.
- Press Release: The company must issue a press release announcing the commencement of the NCIB.