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New proposals from the Toronto Stock Exchange (TSX) would establish requirements for dividend reinvestment plans (DRIPs).

In a notice seeking comments on the proposals, the TSX indicates that by adopting DRIP-specific standards and practices, it aims to “provide greater transparency and a more efficient process for adopting DRIPs,” which may save time and costs for issuers.

Issuers frequently seek guidance from the exchange on how to implement these sorts of plans, list securities that are issued under the plan and amend an existing plan, the notice indicates.

Under the proposals, issuers will be required to pre-clear any new DRIPs that issue additional securities from treasury and securities issued under a DRIP can’t carry a discount of more than 5% discount. The proposals also set a maximum on the number of securities that can be listed under a DRIP.

The proposals are out for a 30-day comment period, ending May 28.

They will be effective upon approval by the Ontario Securities Commission.

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