Companies listed on the TSX Venture Exchange (the
"Exchange") intending to complete
share/unit private placement financings below $0.05, are now
'on the clock' to complete those financings by August 31,
2013. This was one of several announcements made by the Exchange in
its August 7th bulletin, which included the announcement
of certain amendments to Exchange policies, including reducing the
allowable minimum exercise price of warrants and incentive stock
options from $0.10 to $0.05.
Expiry of temporary pricing relief measures
In August 2012, in response to market conditions faced by many
of its listed companies and the effect such conditions were having
on the ability of companies to complete financings, the Exchange
introduced temporary pricing relief measures allowing companies to
complete share/unit offerings below the Exchange mandated minimum
of $0.05 per share/unit. These temporary relief measures also
allowed companies to issue convertible debentures and warrants at a
conversion price/exercise price below the Exchange mandated minimum
of $0.10 for these securities. The relief measures were originally
set to expire on December 31, 2012, but were extended to April 30,
2013 and further extended to August 31, 2013. The Exchange has
provided notice that these relief measures will not be
further extended and will lapse on August 31, 2013.
Perhaps in an effort to do 'something' for companies
continuing to struggle during these difficult market conditions,
the Exchange will be amending its policies to lower the minimum
pricing thresholds of securities in the following
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, such price
applying to the full term of the warrant or option.
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, but will
remain at $0.10 per share for the balance of the term of the
IPOs: the minimum allowable offering price for
initial public offerings (excluding Capital Pool Companies) will be
reduced from $0.15 to $0.10 per security.
Additionally, the Exchange has removed the requirement that a
company must obtain shareholder approval for share consolidations,
subject to certain limitations. However, this change will have no
impact on those companies whose corporate law governing statute
mandates that shareholder approval be obtained for share
consolidations, as is the case under the Ontario, Alberta and
Canada Business Corporations Acts.
The implementation of these policy amendments is targeted for
mid-August, and the Exchange has advised it will publish a separate
bulletin confirming the implementation of the amendments and
setting out applicable transitional provisions, if any.
Rescission of founder share guidelines
In 2008 and 2009, the Exchange instituted guidelines with
respect to the number of existing 'founder shares' it would
permit a company, seeking to list on the Exchange, to have
outstanding at the time of listing. Founder shares are shares
issued to principals and third parties of the company for nominal
consideration. Generally, the Exchange objected to the capital
structure of a company if founder shares represented more than 15%
of the company's outstanding shares at the time of listing.
Effective immediately, the Exchange has rescinded these
guidelines and removed the 15% limit on founder shares. However,
the Exchange retains general discretion to refuse a listing on the
basis that a company's capital structure is excessively
dilutive or otherwise imbalanced. It remains to be seen whether the
removal of this 'bright line test' in favour of greater
Exchange discretion results in a loosening of the thresholds
regarding founder shares.
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.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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