Stikeman Elliott LLP has the distinction of acting as legal
adviser to the first ever IPO of a Canadian SPAC to date. A Special
Purpose Acquisition Corporation (a SPAC) is a publicly-traded shell
company that has as its primary purpose the acquisition of one or
more companies. SPACs raise money from the public and use those
funds to acquire one or more operating companies. While the TSX
adopted specific rules to permit for the listing of
SPACs in 2008, no SPACs had been launched in Canada until this
Generally, a SPAC is founded by a sponsor (or founder) with the
credibility and expertise to raise funds and identify a promising
operating business. The founder (together, if desired, with some or
all of the directors or officers of the SPAC) holds 100% ownership
of the SPAC before its IPO and establishes the management team of
Once formed, the SPAC must apply to be listed on the TSX,
satisfying various listing-related requirements. After listing, a
SPAC has a maximum of 36 months to complete a qualifying
acquisition. Specific listing requirements imposed by the TSX
include having a minimum offering price of $2 and at least
1,000,000 freely tradeable shares with an aggregate market value of
at least $30,000,000 (held by a minimum of 300 "board
lot" holders). Further, at least 90% of the proceeds raised
from the IPO are subject to escrow to be applied towards the
funding of the qualifying acquisition, and at least 50% of
underwriting commissions must similarly be placed in escrow to be
released upon completion of same.
It should be noted that there may be marked differences among
ongoing compliance requirements of the TSX and Canadian securities
regulators as compared to U.S. best practices, where the market for
SPACs is further developed. It may therefore be necessary to
negotiate exemptions in order to address the differences and avoid
inefficiencies in the listing and operation of SPACs in Canada.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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