On August 7, 2013, the TSX Venture Exchange (the “TSX Venture”): (i) provided notice that the Temporary Relief Measures for private placements first announced on August 17, 2012 (the “Relief Measures”) will lapse on August 31, 2013; (ii) provided advance notice that it intends to amend its policies with the goal of easing the burden imposed on Issuers regarding certain minimum pricing rules (other than the $0.05 minimum offering price for shares/units); and (iii) advised that, effective immediately, it has removed the existing 15% limit imposed on “Founder Shares” of Issuers listing on the TSX Venture.
Lapse of the Relief Measures
On August 17, 2012, the TSX Venture implemented the Relief Measures that were set to expire on August 31, 2013. The TSX Venture provided notice that the Relief Measures will not be extended and will therefore lapse on August 31, 2013. However, the TSX Venture also provided a transition period for the termination of the Relief Measures advising that the TSX Venture will allow any Private Placement that has been conditionally accepted by the TSX Venture on or before August 31, 2013 to be completed within 30 days following the date of conditional acceptance of such Private Placement.
Intended Policy Amendments to Minimum Pricing Rules
Aiding the lapse of the Relief Measures is the announcement of intended amendments to TSX Venture policies that will have the effect of easing certain existing requirements and restrictions pertaining to the TSX Venture’s minimum pricing rules (other than the $0.05 minimum offering price for shares/units).
- Minimum Price for Warrants and Options: The minimum allowable exercise price for share purchase warrants and incentive stock options will be reduced from $0.10 to $0.05 per share. This change will apply to the full term of the warrant or option.
- Minimum Price for Convertible Debentures: The minimum allowable conversion price for debentures will be reduced from $0.10 to $0.05 per share for the first year of the term of the debenture. The minimum conversion price for debentures will remain at $0.10 per share for the balance of the term of the debenture.
- Minimum Price for Initial Public Offerings: The minimum allowable offering price for a non-Capital Pool Company initial public offering will be reduced from $0.15 to $0.10 per security.
- Shareholder Approval for Share Consolidations: The TSX Venture will only require shareholder approval for a share consolidation which, when combined with any other share consolidation conducted by the Issuer within the previous 24 months that was not approved by the Issuer’s shareholders, would result in a cumulative consolidation of greater than 10 to 1 over such 24 month period. However, Issuers will still be subject to shareholder approval requirements for consolidations under applicable corporate laws.
The TSX Venture has indicated that it will consider allowing Issuers to rely upon the intended changes to the existing policy requirements prior to the formal adoption thereof.
The TSX Venture has also indicated that it will not be implementing any policy amendments that would continue to permit shares/units to be offered at a price below $0.05 per share or unit (which is currently permitted under the Relief Measures).
Rescission of Bulletins Restricting Founder Shares
In addition to the above, the TSX Venture announced that it has rescinded two of its Bulletins/Notices to Issuers dated December 11, 2007 and October 20, 2008 related to the capital structure of Issuers listing on the TSX Venture. The principal effect of the rescission is the removal of the existing 15% limit on “Founder Shares”. We note that the TSX Venture has retained its general discretion under its initial listing policies, to be applied on a case by case basis, to refuse a new listing on the basis that an Issuer’s capital structure is excessively dilutive or otherwise imbalanced.
For further reference, a copy of the TSX Venture bulletin is available here.