Toronto-based TMX Group Inc.’s Toronto Stock Exchange is extending a temporary measure that grants listed issuers additional time to satisfy listing requirements once they come under a delisting review.

The TSX announced on March 26 that it would keep the length of its remedial review process at 210 days, up from its usual 120 days. The measure, first announced in November 2008, was introduced to help issuers buffeted by the market downturn maintain their listings. It was scheduled to expire at the end of March, but has now been extended until Sept. 30.

“Extending the remedial review period provides companies more time to become compliant with our continued listing requirements,” says Carolyn Quick, director of corporate communications for TMX Group. “We recognize that the current market conditions do make it more difficult to refinance or restructure.”

The TSX announces a delisting review process when a firm fails to meet any of a number of requirements for continued listing.

“Exchanges have minimum market cap size, and recent declines in stock prices have resulted in firms falling below these levels,” says Stephen Sapp, an associate professor of finance with the Richard Ivey School of Business at the University of Western Ontario in London, Ont. “The TSX is extending the time period during which these problems have to be remedied because it has been a market-wide decline.”

Forcing firms to delist could have other negative implications, Sapp adds: “If a firm delists, it is much harder to get debt financing — and this could put it into financial distress, as obtaining debt financing is currently very difficult.”

Although the TSX launches its remedial review process to allow an issuer time to become compliant, it also begins an expedited review process when there are immediate, serious concerns about a firm’s ability to continue operations. No change has been made to the latter process.

“At all times,” Quick says, “we work to ensure that the interests of the investing public are protected.”

The TSX delisted four firms for failure to meet listing requirements in the first quarter of 2009, but launched dozens of delisting reviews. The TSX delisted 30 issuers in 2008 for failure to meet listing requirements, up from 14 in 2007. IE