Listing Requirements of the TSX Venture Exchange (TSX-V) – Industrial, Technology, Life Sciences, Real Estate and Investment Companies

– *updated August 30, 2015 –

TSX Venture ExchangeThere are two tiers on the TSX Venture Exchange. Tier One is aimed at larger more established companies. Tier One companies have certain listing benefits not available to more junior companies listed on Tier Two of the TSX Venture Exchange. Tier Two companies are generally early stage or junior companies which the TSX Venture Exchange believes need a bit more guidance than Tier One companies.

The two tables below set-out the listing requirements for Tier One and Tier Two of the TSX Venture Exchange (TSX-V) for Industrial, Technology, Life Sciences, Real Estate and Investment Companies.

We are always open to talk to corporate executives who are considering listing on the TSX-V.  The listing requirements can sometimes be confusing and waivers can be applied for in certain circumstances when a company desiring to list is strong in all listing categories but for one.  Do feel free to book an appointment with us if you need assistance to determine if your company qualifies to list on the TSX-V or other exchange.

TSX-V – Tier One – Industrial, Technology, Life Sciences, Real Estate and Investment Companies Listing Requirements

Requirements Industrial, Technology & Life Sciences Real Estate Investment
Net Tangible Assets or Revenue C$5,000,000 net tangible assets; orC$5,000,000 revenueIf no revenue, two year management plan demonstrating reasonable likelihood of revenue within 24 months. C$5,000,000 net tangible assets C$10,000,000 net tangible assets
Minimum Cash in Treasury Adequate to carry out stated work plan or execute business plan for 18 months following listing. Adequate to carry out stated work plan or execute business plan for 18 months following listing. Adequate to carry out stated work plan or execute business plan for 18 months following listing.
Minimum Additional Working Capital C$200,000 C$200,000 C$200,000
Property Significant interest in business or primary assets used to carry on business. Significant interest in real property. No requirement.
Prior Expenditure and Work Program History of operations or validation of business. No requirement. Disclosed investment policy.
# of Public Board Lot Holders 250 250 250
Minimum Free Trading Public Float 1,000,000 shares. 1,000,000 shares. 1,000,000 shares.
Minimum % of Issued and Outstanding Listed Shares Held by Public 20% 20% 20%
Market value of Issued Securities to be Listed No minimum No minimum No minimum
Minimum IPO Price Conducted Concurrent to Listing C$0.10 C$0.10 C$0.10
Sponsor Yes(1) Yes Yes

Note: (1) The TSX may waive the sponsorship requirement if sufficient 3rd party due diligence has been conducted (ie. underwriter review in concurrent initial public offering.)


TSX-V – Tier Two – Industrial, Technology, Life Sciences, Real Estate and Investment Companies Listing Requirements

Requirements Industrial, Technology & Life Sciences Real Estate Investment
Net Tangible Assets or Revenue or Arm’s Length Financing C$750,000 net tangible assets; or C$500,000 revenue; or C$2,000,000 arm’s length financing.If no revenue, two year management plan demonstrating reasonable likelihood of revenue within 24 months. C$2,000,000 net tangible assets; or $3,000,000 arm’s length financing C$2,000,000 net tangible assets; or $3,000,000 arm’s length financing
Minimum Cash in Treasury Adequate to carry out stated work plan or execute business plan for 12 months following listing. Adequate to carry out stated work plan or execute business plan for 12 months following listing. Adequate to carry out stated work plan or execute business plan for 12 months following listing.
Minimum Additional Working Capital C$100,000 C$100,000 C$100,000
Property Significant interest in business or primary assets used to carry on business. Significant interest in real property. No requirement.
Prior Expenditure and Work Program History of operations or validation of business. No requirement. Disclosed investment policy and 50% of available funds must be allocated to at least 2 specific investments.
# of Public Board Lot Holders 200 200 200
Minimum Free Trading Public Float 500,000 shares. 500,000 shares. 500,000 shares.
Minimum % of Issued and Outstanding Listed Shares Held by Public 20% 20% 20%
Market value of Issued Securities to be Listed No minimum No minimum No minimum
Minimum IPO Price Conducted Concurrent to Listing C$0.10 C$0.10 C$0.10
Sponsor Yes(1) Yes Yes

Note: (1) The TSX may waive the sponsorship requirement if sufficient 3rd party due diligence has been conducted (ie. underwriter review in concurrent initial public offering.)

The listing committee for the TSX Venture Exchange will also conduct a public interest standard review of all listing candidates looking at such things as:

  • the reputation and past conduct of all directors, officers and majority stockholders;
  • at minimum of two independent directors;
  • characteristics unique to the company or its business;
  • the distribution and spread of the stock of the company (capital structure); and
  • less than 20% of the issued and outstanding stock of the company held by pro-groups at the time of listing

Company’s board of directors must agree to abide by the corporate governance requirements of the TSX Venture Exchange.
In addition to the foregoing the TSX Venture Exchange has different listing standards for Capital Pool Companies and mining companies. A copy of the complete listing policy of the TSX Venture Exchange is available here: Listing Policy.

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    Alixe Cormick is the founder of Venture Law Corporation in Vancouver, British Columbia and a member of Commercialization Advisory Board of the Life Science Institute at the University of British Columbia, the Advisory Board of the National Crowdfunding Association and two private tech companies. She is also a member of the Pacific Northwest Keiretsu Forum, an association of accredited private equity angel investors, venture capitalists and corporate/institutional investors, and Vantech Angel Technology Network, a Vancouver angel group. You can reach Alixe by phone at 604-659-9188, by email at acormick@venturelawcorp.com, on twitter @AlixeCormick or on Google+.

    Listing Requirements of the TSX Venture Exchange (TSX-V) – Exploration and Mining Companies

    – * last updated August 30, 2015 –

     TSX Venture Exchange Mining Listing RequirementsThere are two tiers on the TSX Venture Exchange. Tier One is aimed at larger more established companies. Tier One companies have certain listing benefits not available to more junior companies listed on Tier Two of the TSX Venture Exchange. Tier Two companies are generally early stage or junior companies which the TSX Venture Exchange believes need a bit more guidance than Tier One companies. The table below sets-out the listing requirements for Tier One and Tier Two of the TSX Venture Exchange (TSX-V) for Exploration and Mining Companies.

    We are always open to talk to corporate executives who are considering listing on the TSX-V.  The listing requirements can sometimes be confusing and waivers can be applied for in certain circumstances when a company desiring to list is strong in all listing categories but for one.  Do feel free to book an appointment with us if you need assistance to determine if your company qualifies to list on the TSX-V or other exchange.

    TSX-V – Exploration and Mining Companies Listing Requirements

    Requirements In Production Mining Companies (Tier 1) Pre-Production Feasibility Stage Mining Companies (Tier 2)
    Property Requirements Material interest in a Tier 1 property(1) Significant interest(2) in a qualifying property or, at discretion of the Exchange, a right to earn a significant interest in a qualifying property.
    Recommended Work Program $500,000 on the qualifying property as recommended by geological report $200,000 on the qualifying property as recommended by geological report
    Net Tangible Assets $2,000,000 net tangible assets No requirement
    Minimum Prior Expenditure and Work Program N/A C$100,000 of exploration expenditures on the qualifying property in the past three years
    # of Public Board Lot Holders 250 200
    Minimum Free Trading Public Float 1,000,000 shares. 500,000 shares.
    Minimum % of Issued and Outstanding Listed Shares Held by Public 20% 20%
    Market value of Issued Securities to be Listed No minimum No minimum
    Minimum IPO Price Conducted Concurrent to Listing C$0.10 C$0.10
    Minimum Cash in Treasury Adequate to carry out stated work plan or execute business plan for 18 months following listing. Adequate to carry out stated work plan or execute business plan for 12 months following listing.
    Minimum Additional Working Capital C$200,000 C$100,000
    Sponsorship Required Yes(3) Yes(3)
    Form 43-101 Geological Report Yes. Yes.

    Notes:

    1. “Tier 1 property” means a property that has substantial geological merit and is:
      • a property in which the Issuer holds a material interest;
      • a property on which previous exploration, including detailed surface geological, geophysical and/or geochemical surveying and at least an initial phase of drilling or other detailed sampling (such as trench or underground opening sampling), has been completed;
      • a property on which drilling or other detailed sampling on the property has identified potentially economic or economic materialization; and
      • an independent geological report recommends a minimum $500,000 Phase 1 drilling (or other form of detailed sampling) program based on the merits of previous exploration results; or an independent, positive, feasibility study demonstrates that the property is capable of generating positive cash flow from ongoing operations.
    2. Significant interest means the company holds or have the right to earn and maintain a 50% interest in the property. Companies holding less than a 50% interest will be considered on a case-by- case basis looking at program size stage of advancement of the property and strategic alliances.
    3. The TSX may waive the sponsorship requirement if sufficient 3rd party due diligence has been conducted (ie. underwriter review in concurrent initial public offering.)

    The listing staff of the TSX Venture Exchange will also look at the suitability of all officers, directors and stockholders holding 10% or more of the company’s stock. Companies must have at least two independent directors. All companies listed on the TSX Venture Exchange must agree to abide by the corporate governance requirements of the exchange. For the listing criteria of exploration and mining companies on the TSX, go to the TSX Venture Exchange website: TSX – Listing Requirements for Exploration & Mining Companies

    For the listing criteria of technology, industrial and research and development companies click here or go to the TSX Venture Exchange website.  TSX – Industrial, Technology, Research & Development.

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    Other Articles You May Find of Interest:

     

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      Alixe Cormick is the founder of Venture Law Corporation in Vancouver, British Columbia and a member of Commercialization Advisory Board of the Life Science Institute at the University of British Columbia, the Advisory Board of the National Crowdfunding Association and two private tech companies. She is also a member of the Pacific Northwest Keiretsu Forum, an association of accredited private equity angel investors, venture capitalists and corporate/institutional investors, and Vantech Angel Technology Network, a Vancouver angel group. You can reach Alixe by phone at 604-659-9188, by email at acormick@venturelawcorp.com, on twitter @AlixeCormick or on Google+.

      Going Public in Canada & the United States

      – *updated August 30, 2015 –

       going-publicThere are four main ways a company can “go public” in the United States and Canada. One is issuing securities in an offering or transaction registered with all relevant securities commissions (initial public offering). A second is registering your company and its outstanding securities with the Securities and Exchange Commission (the “SEC“), State and or provincial regulators (non-offering registration of existing securities). The third is conducting a reverse takeover of a public shell company or other public vehicle. The fourth is through a listing on the TSX Venture Exchange (“TSX-V) as a capital pool company. In the US, the last option is not available and the routes open to going public are the first three. In Canada, all four means of going public are available to companies.

      Initial Public Offering

      Going public via an initial public offering is theoretically available to companies of all sizes. Traditional initial public offerings, however, require an underwriter. Finding a willing underwriter in the US and Canada is often difficult if not impossible to accomplish by small and micro-cap companies. Many small companies are using direct public offering as a non-traditional initial public offering. One of the main advantages of a direct public offering is companies avoid the expense and complications of an underwriter and underwriter’s counsel. A direct public offering can be very effective particularly when the amount being raised is under $2,000,000 and the internet is utilized to sell all or part of the offering. Direct public offerings are more effective in the US than in British Columbia, since in BC, companies need to be listed on a recognized exchange (the US OTC Markets are not recognized by Canadian securities regulators).

      Registration of Existing Securities

      In 1999, hundreds of companies filed Form 10SB documents with the SEC to register their companies and their outstanding securities with the SEC to become fully reporting under the federal securities level. This rush to register was caused when the OTC Bulletin Board imposed eligibility requirements on OTCBB quoted companies, which included being a reporting company with the SEC. The disclosure required in a Form 10SB is similar in content to that required in a prospectus. Unlike a prospectus, however, not all Form 10SB documents are reviewed by the SEC.

      Canadian resident or operating companies may also become US reporting companies by registering their outstanding securities with the SEC. They may choose to register using the forms provided by the SEC for foreign issuers (Form 20F) or use Form 10 which is provided for US domestic issuers. There are several differences between the two forms of registration and perceived and real advantages and disadvantages.

      Companies may also elect to register their outstanding securities in the US or Canada by filing a prospectus qualifying these securities for resale. Canadian transactions will need an underwriter if the shares are to be registered in Canada and the company wishes to become a reporting issuer in Canada.

      Reverse Takeovers

      Going public via a reverse takeover remains a popular method for small and micro-cap companies in the US and Canada. A reverse takeover is where an operating private company merges into or is acquired directly or indirectly by a non-active or shell company. The value of the shell company is in its reporting issuer status and/or the fact that its securities are listed or quoted for trading. After the merger, the former management, the board of directors and the majority of the stockholders of the operating company control the former shell company.

      Reverse takeovers are popular with small and micro-cap companies for a number of reasons:

      • generally a reverse takeovers tends to take less time to complete than either an initial public offering or US Form 10 registration filing;
      • often the public shell company provides the shareholder spread and public float requirements needed to list on an exchange or quotation service;
      • there is no risk of the transaction not closing due to unstable market conditions, which is a real risk when conducting an initial public offering;
      • initial public offerings and US Form 10 registrations tend to require greater attention from management than reverse takeover transactions;
      • there is no need for an underwriter to complete a reverse takeover; and
      • there is often less dilution of ownership.

      Capital Pool Companies

      In Canada, the TSX-V has allowed companies to list whose sole purpose is to conduct a reverse merger or acquire the assets of promising company or venture. They are called capital pool companies (“CPC“) and are exclusive to the TSX-V. A CPC must merge or acquire a company or asset within 18 months of listing on TSX-V. This is called a qualifying transaction. After a successful qualifying transaction, the CPC becomes a regular listed company on TSX-V. All CPCs must comply with TSX-V policy 2.4.

      A CPC which fails to merge or acquire a company or asset within the required time frame is de-listed from the TSX-V and may or may not be subsequently listed on the NEX Board which was recently created by the TSX-V for companies which no longer meet the listing standards of the TSX-V. A CPC which has been delisted from the TSX-V can still complete a reverse merger or acquisition which would qualify it to re-list on the TSX-V, the CSE or the TSX so long as at the end of the transaction the company meets the listing standards or the exchange it proposes to be listed on.

      Much of the information in this section has been taken from the TSX Group website and the CSE website.

      _________
      Other Articles You May Find of Interest:

      _________

      Alixe Cormick is the founder of Venture Law Corporation in Vancouver, British Columbia and a member of Commercialization Advisory Board of the Life Science Institute at the University of British Columbia, the Advisory Board of the National Crowdfunding Association and two private tech companies. She is also a member of the Pacific Northwest Keiretsu Forum, an association of accredited private equity angel investors, venture capitalists and corporate/institutional investors, and Vantech Angel Technology Network, a Vancouver angel group. You can reach Alixe by phone at 604-659-9188, by email at acormick@venturelawcorp.com, on twitter @AlixeCormick or on Google+.