On August 14, 2013, the TSX Venture Exchange ("TSX-V")
published policy amendments to replace certain temporary pricing
relief measures related to private placements, which were
implemented last year and set to expire on August 31, 2013. The
purpose of the amendments is to promote and facilitate both access
to capital and the completion of listing transactions by easing the
rules relating to minimum pricing requirements for offerings and
capital structure matters. In addition, effective August 7, 2013,
the TSX-V removed, effective immediately, the existing 15% limit
imposed on "Founder Shares" of issuers listing on the
Under the relief measures, TSX-V-listed issuers were able to
offer securities at an issue price below the $0.05 minimum. The
TSX-V implemented the relief measures to assist issuers facing
imminent financial hardship in a depressed capital markets
environment, which saw the share prices of many TSX-V issuers fall
below $0.05. The relief measures effectively permitted companies to
complete financings without having to first complete a share
consolidation in order to meet minimum pricing requirements. As it
stands now, an issuer on the TSX-V needs shareholder approval to
complete a share consolidation, which is both costly and
The policy amendments include:
Minimum Price for Warrants and Options: A
reduction of the minimum exercise price for share purchase warrants
and incentive stock options from $0.10 to $0.05 per share, which
will apply to the full term of the warrant or option.
Minimum Price for Convertible Debentures: A
reduction in the minimum conversion price for debentures from $0.10
to $0.05 per share for the first year of the debenture's
Minimum Price for Initial Public Offerings: A
reduction in the minimum offering price from $0.15 to $0.10 per
share for a non-Capital Pool Company initial public offering.
Shareholder Approval for Share Consolidations:
A modification to the TSX-V's shareholder approval requirement
for share consolidations. The TSX-V will only require shareholder
approval for a consolidation if such consolidation, when combined
with any other consolidation conducted by an issuer within the
previous 24 months that was not approved by the issuer's
shareholders, would result in a cumulative consolidation ratio of
greater than 10 to 1 over such 24 month period.
LAPSE OF RELIEF MEASURES With the relief
measures set to lapse and the capital markets malaise continuing,
easing of the financing and share consolidation rules should
provide some relief to the cash-strapped junior resource sector,
where by TSX-V estimates around half of the junior TSX-V issuers
are trading below $0.05. The TSX-V has indicated that it will not
be implementing any policy amendments that would continue to allow
issuers to offer shares below $0.05. Thus it is worth noting that,
while the easing of shareholder approval rules appear on their face
to provide relief to beleaguered issuers, an issuer will still be
subject to shareholder approval requirements under applicable
corporate laws, so this hurdle has not been removed entirely.
Further, share consolidations are subject to TSX-V acceptance and
certain other requirements under Policy 5.8 of the TSX Venture
Exchange Corporate Finance Manual.
The TSX-V has provided a transition period for the termination
of the relief measures allowing any private placement that has been
conditionally accepted by the TSX-V on or before August 31, 2013 to
be completed within 30 days following the date of conditional
acceptance of such private placement.
RECISSION OF DEAL STRUCTURE AND FOUNDER SHARE GUILDELINES
In addition to the above changes, the TSX-V announced that it
has rescinded two of its Bulletins/Notices to Issuers dated
December 11, 2007 and October 20, 2008 related to deal structure
and founder shares guidelines. The rescission of these guidelines
will have the principal effect of removing the existing 15% limit
on "Founder Shares". We note that the TSX-V will retain
its general discretion to refuse a listing on the basis that an
issuer's capital structure is excessively dilutive or otherwise
imbalanced. The TSX-V will apply this discretion on a case by case
basis with a view to the facts specific to each listing.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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