Amendments to Policy 5.1 – Loans, Bonuses, Finder's
Fees and Commissions ("Policy 5.1") of the TSX Venture
Exchange ("TSXV") came into force on January 26, 2015.
Large portions of the amendments are housekeeping in nature. The
substantive amendments involve formalizing into written policy new
or existing working practices and the creation of new requirements
and limitations to address certain circumstances involving loan
bonuses, finder's fees and commissions that were not previously
addressed in Policy 5.1. Notable substantive changes to Policy 5.1
include the following revisions:
1. Loan Bonus Requirements and Limitations:
Loan bonuses may not be granted to a
lender or guarantor in relation to a loan or debt instrument that
is convertible into shares listed on the TSXV.
The limits for both bonus shares and
bonus warrants are now calculated using the applicable market
price, not the discounted market price.
The limit on bonus warrants increased
from 40% to 100% of the value of the loan (i.e. 100% warrant
coverage). This, combined with the change in (a) above, addressed a
discrepancy between the TSXV's limit on detachable warrants
issued in connection with a convertible debenture (as set forth in
Policy 4.1 – Private Placements) and the current limit on
bonus warrants issued in connection with a non-convertible
For loans with a term of less than
one year, bonus warrants are permitted, but bonus shares are
generally no longer permitted.
Provisions related to the
acceptability of a loan bonus for loan renewals or extensions are
2. Restrictions on "Finding Oneself":
The TSXV formalized restrictions on the ability of an issuer to
pay either: (i) a commission to an investor in respect of such
person's own investment in the issuer; or (ii) a finder's
fee to a vendor or purchaser in respect of such person's sale
or purchase of assets or services to or from the issuer. Certain
limited exceptions to these general rules are laid out in the
3. Commission Limitations:
The amendments also clarify that if compensation payable by an
issuer in respect of a financing transaction includes shares or
warrants, the aggregate value of the shares and warrants cannot
exceed 12.5% of the gross proceeds of the financing. For these
purposes, one warrant will be valued as one-half of a share (i.e.
the existing 25% limit on warrants under section 3.4 of Policy 5.1
The amended version of Policy 5.1 can be found on the TSXV's
website (here) along with a blackline to the previous
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