Canada: The TSX Venture Exchange Proposes Significant Initiatives To Help Revitalize Canada's Public Venture Market

Last Updated: December 21 2015
Article by Rina Jaswal

On December 17, 2015, the TSX Venture Exchange ("TSXV") announced through its White Paper that the TSXV is committed to: (i) meaningfully reducing issuers' administrative and compliance costs, without compromising investor confidence; (ii) expanding the base of investors financing companies and generally enhancing liquidity; and (iii) diversifying and growing the stock list to increase the attractiveness of the marketplace overall. The TSXV has already begun to implement some changes and initiatives, however, some initiatives, such as those relating to the TSXV policies and significant changes to the TSXV practices are subject to the securities commission's approval.

These revitalization initiatives are borne out of extensive industry consultation and collaboration. The TSXV's management team interviewed over 130 issuers (in industries such as natural resources, life sciences, technology, financial services) and key stakeholders (such as investment bankers, accountants, securities lawyers and senior management from brokerage firms) about the current state of Canada's public venture market.

These initiatives are borne out of the extensive industry consultation and collaboration.

Reducing Administrative and Compliance Costs without Compromising Investor Confidence

The TSXV will implement the following changes to reduce the time and costs of various transactions without compromising confidence in the integrity of the TSXV:

  1. Abolishing the general requirement for sponsorship. In those circumstances where certain material aspects of a company's disclosure document are not independently verified, and there is no acceptable substitute for arm's-length due diligence, the TSXV may request a focused independent review of the new listing application.
  2. Revising the TSXV's requirement for shareholder approval for certain transactions so that it will not generally apply to inactive companies completing an arm's length transaction, such as a change of business or reverse takeover.
  3. Recognizing active and proven directors and officers of TSXV-listed companies.
  4. Extending the interval to renew a Personal Information Form ("PIF") from three (3) years to five (5) years.
  5. Expanding the platforms for automated online filings. The TSXV currently offers this service for private placement transactions and the intention is to expand this service to additional types of transactions.
  6. Implementing a more responsive system to accelerate transaction processing. The TSXV will commit to providing comments within a specified number of days.
  7. Eliminating the TSXV's escrow requirements and applying only the Canadian Securities Administrator's national policy on escrow. In conjunction with this, the TSXV may eliminate the concept of Tier I and Tier II boards on TSXV.

Expanding the Base of Investors Financing Companies and Generally Enhancing Liquidity

The TSXV is developing a number of initiatives to attract more investors and increase public venture market liquidity, such as:

  1. Bolstering the TSXV's business development programs to create positive awareness of Canada's public venture market and to showcase TSXV-listed companies to fund managers, retail investors, investment advisors, investment bankers and research analysts.
  2. Leading a team of industry experts and diverse TMX Group representatives, with an aim of reducing barriers for U.S. investors to participate in the Canadian market.
  3. Working to facilitate more direct communication between issuers and investors (when allowed by securities laws). For example, the TSXV is currently developing mobile- and web-based tools to stream summaries of treasury offerings from its listed companies.
  4. Introducing a Market Making program on the TSXV, which will facilitate arrangements between issuers and qualified Market Makers under the high governance and monitoring standards of the TSXV.
  5. Introducing new investor analytic programs and research products. The TSXV is currently beta testing a new stock screening tool that will allow investors to identify opportunities by using numerous parameters. The TSXV is also investigating research tools that will leverage crowd-sourced knowledge.
  6. Engaging with the Investment Industry Regulatory Organization of Canada ("IIROC") to obtain clarity regarding the application of IIROC's suitability standards. In conjunction with this, IIROC will soon publish a FAQ document that is intended to create a consistent understanding of suitability standards within the industry.
  7. Amending and simplifying the TSXV's Continued Listing Requirements ("CLR") and providing additional tools for companies to reactivate from NEX, a separate board of TSXV for companies that no longer meet the TSXV's CLR. The TSXV will also introduce more stringent criteria for maintaining a listing on NEX.
  8. Advocating for additional prospectus exemptions for public companies, such as the recently introduced existing shareholder exemption and the proposed dealer exemption.
  9. Partnering with a Canadian financial technology company to enhance the TSXV's programs promoting financial literacy and capital markets education in universities and colleges across Canada.

Diversifying and Growing the Stock List to Increase the Attractiveness of the Marketplace Overall

As the perception is that the TSXV lacks diversity and is too natural resource oriented, the TSXV intends to further diversify the stock list in terms of industries and geography as follows:

  1. Hiring a dedicated sales team (the "SME Sales Team") to bring new companies to the TSXV's marketplace from diverse industries, and to help these companies secure financing. The SMS Sales Team will be deployed in key centers across Canada and in the U.S.
  2. Revising the Capital Pool Company Policy to add flexibility to the program and make it more attractive to companies in all industry sectors.
  3. Tailoring TSXV policies further to reflect the needs of non-resource companies.
  4. Increasing the TSXV's efforts to ensure private equity firms, venture capitalists and angel investors consider the TSXV as an effective exit strategy for early-stage companies.
  5. Exploring alliances with other exchanges that could benefit the TSXV listed issuers, similar to the TSXV's relationship with the Santiago Stock Exchange, which provides qualified TSXV-listed companies with complimentary dual-listings.
  6. Engaging with Exchange Traded Fund firms to develop more investment products that may include baskets of TSXV-listed companies.
  7. Advocating for early-stage public companies to be fully eligible for the refundable investment tax credit under the federal Scientific Research and Experimental Development program.

For more information, please see

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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Rina Jaswal
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