Effective December 15, 2016, the TSX Venture Exchange implemented amendments to its Policy 5.2 Changes of Business and Reverse Takeovers which, among other things, formalized existing working practices related to certain transactions and considerations that had not previously been included in the Policy, and corrected certain oversights related to procedural matters. The amendments also incorporated guidance related to discretionary waivers of shareholder approval requirements outlined by the TSXV in a March 30, 2015 bulletin.
What has changed?
While the amendments involved a significant redrafting of Policy 5.2, the majority of the amendments were non-substantive, including a reorganization of content and the removal of redundant or irrelevant sections of the Policy. Substantive changes of interest included the following:
- Shareholder approval will generally not be required by the TSXV for a transaction that is not a “related party transaction” where the issuer does not have active operations but is in good standing, provided that shareholder approval is not required under applicable corporate and securities laws. This amendment reflects the contents of the March 2015 Bulletin which indicated that the TSXV would give consideration to waiver applications based on the foregoing criteria.
- Requirements related to private placements used as bridge financing for the issuer have been added to the Policy based upon certain unpublished policies that the TSXV has been applying for several years. Among these, the issuer must not have sufficient financial resources to pay for the costs associated with completing the change of business or reverse takeover, the bridge financing must be completed independent of the change of business or reverse takeover, and discount rules will apply to the pricing of the bridge financing.
- Non-refundable deposits or unsecured loans may be advanced to target companies or vendors without TSXV acceptance up to a maximum of $25,000. Funds advanced in excess of this cap must be advanced as secured loans and subject to the satisfaction of certain enumerated conditions, including TSXV acceptance.
Other amendments include an attempt to minimize the inconsistencies with respect to the documentation required under Policy 5.2 and other TSXV Policies relating to initial listing applications, and the addition of new guidance to facilitate an understanding of the policy requirements. The TSXV has also indicated that it will consider applications to waive sponsorship requirements in appropriate circumstances given that the TSXV has indicated its future intention to eliminate the general requirement for sponsorship.