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The TSX Venture Exchange (the "TSXV") offers a unique listing alternative program referred as the Capital Pool Company (“CPC”) program that enables experienced public company directors and officers to form a "shell" company and subsequently raise an initial pool of capital and list the shell company as a CPC on the TSXV.
The TSXV is one of three primary stock exchanges in Canada; focused on emerging or growth companies (whereas its affiliated entity, the Toronto Stock Exchange (TSE), serves Canada's senior equity market). The TSXV was originally formed by a merger of the Vancouver Stock Exchange (VSE) and Alberta Stock Exchange (ASE) that created the Canadian Venture Exchange (CDNX), which was subsequently acquired by the TMX Group Inc. which also operates the TSE. The TSXV is considered a junior or "venture issuer" exchange, generally requiring less comprehensive and costly listing and on-going regulatory compliance more suited such emerging or growth companies.
The CPC program enables experienced public company directors and officers to form a "shell" company with no assets other than cash and no commercial operations and subsequently raise an initial pool of capital and list the shell company as a CPC on the TSXV. Once listed, the CPC then uses these funds to seek out and acquire an operating business that meets TSXV requirements (referred to as the CPC’s "Qualifying Transaction"). It is the most common way that companies go public on TSXV and the program has an incredible track record with over 2,600 issuers listed, over $75 billion dollars raised and many companies that now grown to be leaders in the Canadian markets.
The CPC program is a three-step process. The first step is to have seasoned directors and officers (directors and officers must meet the minimum suitability requirements under Policy 3.1 – Directors, Officers, Other Insiders & Personnel and Corporate Governance and, with respect to CPCs in particular, the TSXV will review the qualifications, experience, and regulatory history of each proposed member of the board of directors to determine their suitability as a CPC board member on both an individual basis, and in relation to the other members of the board) form a company with no assets other than seed cash and no commercial operations. The second step is to have the company undertake an initial public offering ("IPO") to raise capital similar to a traditional IPO and list on the TSXV. However, unlike a traditional IPO, the CPC program enables the IPO and TSXV listing while the CPC still has no assets other than cash and no commercial operations. In the third and final step, the CPC then uses the cash on hand to seek out an investment opportunity in a growing business by way of the Qualifying Transaction. Once the CPC has completed its Qualifying Transaction and acquired an operating company that meets TSXV listing requirements, its shares continue trading as a regular listing on TSX Venture Exchange.
Further details on the TSXV's CPC program can be found here.
Endeavor Law can assist on all aspects of the CPC program including the formation, initial financing and listing of a CPC; to the due diligence, documentation and completion of a Qualifying Transaction (on behalf of either the CPC or the target company). Endeavor Law will always seek to provide competitive pricing for any legal services requested and is pleased to discuss fee arrangements that suit any potential client.
Does not constitute legal or other advice and must not be used as a substitute for legal advice from a qualified legal professional in your jurisdiction who has been fully informed of your specific circumstances. Information may not be up-dated subsequent to its initial publication and may therefore be out of date at the time it is read or viewed. Always consult a qualified legal professional in your jurisdiction.