Canada: TSXV Amends Policy 4.1 - Private Placements

Last Updated: April 14 2015
Article by Melanie Cole and Daniel Everall

The TSXV's amendments to Policy 4.1 – Private Placements ("Policy 4.1") came into force on January 26, 2015, many of which are non-substantive in nature despite the policy undergoing a substantial redraft. Some of the more substantive amendments include the following:

1. Expanded Guidance on Notice and Acceptance Procedures:

The amendments include further guidance from the TSXV on the steps involved in the notice and acceptance process for a private placement, from price reservation to the publication of the TSXV's bulletin. This new guidance in Policy 4.1 outlines the steps to be taken by an issuer when it intends to close a private placement upon receipt of conditional acceptance of the TSXV as opposed to final acceptance.

2. Part and Parcel Pricing Exception:

It was clarified that the warrant exercise price premium component of the part and parcel pricing rules does not apply if the private placement is the concurrent financing in connection with a qualifying transaction, reverse takeover or change of business such that the exercise price of warrants issued as part of a concurrent financing to a qualifying transaction, reverse takeover or change of business need not be set at a premium to the applicable market price.

3. News Releases:

Policy 4.1 now includes additional guidance with respect to initial, closing and other news releases relating to private placements. Notably, the following disclosure requirements generally apply for private placements: the initial public disclosure of the private placement must be made at the time the proposed offering price is reserved; there must be no undisclosed material changes at the time the issuer reserves the proposed offering price; all material changes which occur during the private placement process must be disclosed; and the issuer must announce the closing of the private placement immediately following the close.

4. Filing Requirements:

The amendments include details on the specific filing requirements to be met by issuers applying for conditional and final acceptance from the TSXV. In particular, issuers should be cognisant of the requirement to apply to the TSXV for acceptance of the proposed terms of the private placement within 30 calendar days after the price reservation date.

5. Closing of the Private Placement:

The amendments include expanded guidance in respect of the TSXV's conditions to closing, timeframes for closing and final filing requirements. Of particular note is the clarification that if a private placement involves the creation of a new insider or a new control person, the issuer may not close on subscriptions from those persons until the TSXV has provided its final acceptance to the private placement.

6. Amending Convertible Securities:

A new section of Policy 4.1 sets out the requirements applicable to obtaining TSXV acceptance for an amendment to the terms of a previously-issued security which is convertible into a listed security. This new section is reflective of existing working practices and emphasizes that an amendment to the terms of convertible securities may constitute a distribution of a new security and thereby may require certain prospectus exemptions. Additionally, any amendments to the terms of a convertible security (including a change to the conversion price or an extension of the conversion period) will require TSXV acceptance.

7. Implementation of V-File and Discontinuation of Expedited Filing System:

The V-File System is now functional and available for use by issuers. This system allows for the electronic filing of the information that is currently included in a Form 4B (Notice of Private Placement) and automates certain components of the TSXV's review and acceptance process for private placements.

The amended version of Policy 4.1 can be found on the TSXV's website (here) along with a blackline to the previous version (here).

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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Authors
Melanie Cole
Daniel Everall
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