Canada: TSX Outlines Proposed Venture Exchange Reform

On December 17, 2015, the TSX Venture Exchange (TSXV or the Exchange) published a White Paper on its proposed broad-based reforms to various TSXV rules, policies and strategies aimed at fostering renewed interest in the Exchange and its services in the wake of ongoing sluggish capital markets conditions for junior issuers. The White Paper, Revitalizing TSX Venture Exchange: Canada's Public Venture Market, was the result of a lengthy consultative process, during which more than 130 clients and key stakeholders from many of the TSXV's most important industry sectors (including natural resource, science and technology and financial services) provided feedback to the Exchange that was then examined by various advisory committees across Canada. The White Paper synthesizes their recommendations into a three-pronged strategic reform program aimed at: (1) reducing the financial burden of compliance for listed issuers; (2) attracting new and more diverse capital to the Exchange; and (3) broadening and diversifying the base of listed issuers on the Exchange. The proposed initiatives within each prong range from general to specific and from conceptual to technical, but the TSXV has indicated its intention to implement these initiatives on an "aggressive timeline", subject in certain cases to regulatory approval.

Cost of Compliance

The White Paper identified the financial requirements of ongoing compliance with Exchange rules as a key growth constraint for existing listed issuers in difficult market conditions. While many of the compliance obligations derive from securities laws applicable to venture companies, as opposed to from the Exchange itself, the perception that the red tape of audit compliance, resource sector compliance (such as technical reports in the mineral and oil and gas sector) and general disclosure compliance is too burdensome may be slowing the growth of listed issuers and discouraging potential Exchange clients from seeking a listing in the first place. To combat this perception and to ease the financial burden on junior issuers, the Exchange proposes to implement a series of rule changes, many of which will require significant amendments to the TSX Venture Exchange Corporate Finance Manual, including:

  • Eliminating the general requirement for sponsorship of new issuers or issuers undertaking a reverse-takeover (RTO), change of business (COB) or other business combination;
  • Narrowing the application of shareholder approval requirements for inactive issuers undertaking an RTO or COB;
  • Implementing a director and officer NEXUS-type status certification program to reduce or eliminate ongoing requirements for certain established and proven individuals and extending the shelf life of on-file personal information forms for directors and officers from three to five years;
  • Eliminating escrow requirements that overlapped with similar requirements of the Canadian Securities Administrators, and which in certain cases could be more onerous; and
  • Implementing an automated system for transaction filing and accelerating response times to speed up overall transaction processing, including a commitment to provide comments on filings within a specified number of days.

By implementing the initiatives listed above, the TSXV hopes to meaningfully reduce the cost of compliance for existing and potential issuers and change the perception that such costs are too restrictive for market participants and new entrants. At the same time, the Exchange is not of the view that the reforms are so dramatic as to undermine the Exchange's reputation for credibility and market integrity that is essential to the other two prongs of the White Paper strategy.

Bringing the Brokers

The White Paper notes that the flow of capital to early-stage public issuers has been noticeably reduced in recent years, both due to market trends, such as sector rotation away from areas in which Exchange listings have historically been concentrated, as well as shifts in strategy within the investment brokerage and securities dealer community. While the Exchange is keen to highlight the number of TSXV graduates that subsequently list on the Toronto Stock Exchange and become mature public companies with fully-developed capital structures as a means of downplaying the speculative component of public venture capital, the White Paper does grant that strategic measures are needed to restore and bolster interest in TSXV-listed issuers within the investment community. Though the initiatives proposed are less technical and less defined than the proposed compliance policy changes noted above, the Exchange has proposed:

  • Undertaking active and ongoing promotion of TSXV-listed issuers through roadshow presentations to fund managers, retail investors, investment advisors and bankers and research analysts and instituting an ongoing streaming summary service of available public offerings;
  • Introducing an new market making program to be administered by the Exchange;
  • Advocating for securities law reform to increase the number of available prospectus exemptions and lower the regulatory barriers to United States investors participating in the Canadian public venture market; 
  • Introducing new research products aimed at providing information to potential investors about Exchange issuers that are typically too small to be covered by traditional research analysts; and
  • Investing in financial literacy at the post-secondary level.

The proposals above are a mix of concrete and more conceptual initiatives and, particularly in the case of investing in new research products and financial literacy education, the results and benefits are likely to be borne out over a much longer period of time, but the TSXV hopes that they will serve to position the Exchange as an attractive destination for capital in a wider segment of the investing community.

Problem of Perception

The third prong of the White Paper's strategy is to increase the number of Exchange issuers by combating the perception that the TSXV is primarily a natural resources-focused market and promoting its services across a wider array of industries. While maintaining its reputation as the premier market for junior mining and junior oil and gas issuers, the TSXV seeks to broaden its client base by:

  • Implementing changes to the Capital Pool Company (CPC) program to widen its usage to a broader set of industries and build on the success of the almost 30 percent of listed graduates that are former CPCs;
  • Showcasing the TSXV amongst the private venture capital community, including VCs and other late stage private equity investors to promote a listing as a viable exit strategy;
  • Building partnerships with other exchanges to expand the international reach of listed issuers and promote long-term liquidity;
  • Exploring the creation of TSXV-specific basket products such as ETFs to foster investment in junior issuers with more diversification and less risk; and
  • Advocating for tax reform to allow early stage public issuers to become eligible for Scientific Research & Experimental Development tax credits in the same way private companies of similar development are.

The proposed initiatives clearly express the Exchange's desire to expand its client base primarily into the innovation, science and technology sector, where private capital currently dominates the investment landscape. Nearly 500 non-resource companies currently list on the TSXV and the growth of this figure in the medium term is likely to be a key metric of success for this third prong.

Moving Forward

The Exchange has yet to propose any specific rule changes or publish any specific amendments, draft policies or program guidelines, however it is likely that many of these will be seen following a series of town hall meetings the Exchange proposes to host in the early part of 2016, at which the Exchange will entertain feedback on the White Paper's strategy and proposed initiatives. Existing issuers and those other stakeholders who stand to benefit significantly from these reforms should continue to monitor these developments in the coming months.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Christopher J. Doucet
In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions