The TSX Venture Exchange ("TSXV") has
extended the temporary pricing relief measures (the
"Relief Measures") it introduced last
year relating to private placement financings. Until August 31,
2013, subject to certain conditions, TSXV listed companies will
continue to be able to complete:
share and unit offerings at offering prices below $0.05;
debenture offerings at debenture conversion prices below $0.10;
offerings involving warrants at warrant exercise prices below
Why are the relief measures needed?
The TSXV implemented the Relief Measures in August 2012 in
response to the depressed market environment which has seen the
share price of many of its listed companies fall below $0.05.
Absent the Relief Measures, TSXV policies prohibit share and unit
offerings to be priced below $0.05, thereby making it difficult for
companies whose share price has fallen below $0.05 to raise money
by way of private placement.
Mindful that private placement financings are the lifeblood of
many of its listed companies, the TSXV has temporarily relaxed its
pricing rules and introduced the Relief Measures to facilitate the
ability of companies, particularly those companies subject to
immediate or imminent financial hardship, to complete financings.
The Relief Measures were initially set to expire on December 31,
2012, were previously extended to April 30, 2013 and have now been
further extended to August 31, 2013.
What conditions must be satisfied?
The Relief Measures are subject to certain conditions:
(a) a maximum of $500,000 may be raised in reliance on the
(b) the share (or unit) offering price must not be less than the
last closing price of the company's shares before the private
placement is announced (i.e. the offering price cannot be at a
discount to such closing price);
(c) the company must demonstrate that it is subject to immediate
or imminent financial hardship and that it does not have the time
or resources to complete a share consolidation prior to closing the
(d) up to $50,000 (the "Excluded
Amount") can be used for general working capital
purposes, and the balance of the funds raised must be used to
maintain or preserve the company's existing operations,
activities and assets;
(e) with the exception of the Excluded Amount, the company
cannot use the proceeds to compensate or settle indebtedness with
related parties of the company;
(f) on closing, the company must issue a press release that
contains an itemized breakdown of the use of proceeds of the
(g) a certificate of the CEO or CFO must be provided to the TSXV
confirming details relating to the company's financial
(h) if more than $200,000 is to be raised from related parties
of the company, at least 75% of any additional amount above
$200,000 must be subscribed for by persons that are not related
parties of the company.
Additional considerations regarding convertible
debentures and warrants
The conversion price of a convertible debenture cannot be less
than the last closing price of the company's shares before the
private placement was announced, subject to a minimum conversion
price of $0.05.
The exercise price of a warrant issued as part of a unit
financing cannot be less than the greater of: (i) the offering
price of the private placement; (ii) the last closing price of the
company's common shares before the private placement was
announced; and (iii) $0.05.
The TSXV will permit a conversion price or exercise price of
less than $0.10 only for the first 12 months following closing of
the private placement. At the end of 12 months, the conversion
price or exercise price of unconverted debentures or unexercised
warrants must automatically increase to a minimum of $0.10 for the
remainder of the term of the debenture or warrant.
Capital pool companies are not permitted to rely upon the Relief
Private placements undertaken in reliance upon the Relief
Measures must close by August 31, 2013.
TSXV listed companies contemplating conducting a private
placement in reliance upon the Relief Measures are advised to
consult with their legal advisors to confirm full compliance with
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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