Canada's public venture market has traditionally served as a
catalyst of growth for many small-cap and early-stage companies.
However, it has experienced a recent decline due to various
factors, including a sustained collapse in commodity prices. In
December 2015, the TSX Venture Exchange (TSXV) released a white
paper outlining a revitalization plan to address
weaknesses that have limited the success of the public venture
market in Canada. The white paper was followed by a series of town
hall meetings across the country. In the white paper, and as
further described at the town hall meetings, three main goals were
identified: (a) reducing costs without compromising investor
confidence; (b) expanding the investor base and enhancing
liquidity; and (c) diversifying and growing the stock list.
Proposed initiatives in support of these goals are summarized
below. The TSXV has already begun to execute some of these
initiatives and has assigned aggressive timelines for the
implementation of those that remain to be implemented.
Reducing costs without compromising investor
The TSXV has proposed changes to decrease administrative and
compliance costs for issuers without jeopardizing investor
integrity. Some of the initiatives proposed to achieve this goal
include eliminating the sponsorship and shareholder approval
requirements for inactive companies completing arm's length
transactions. The interval to renew a personal information form
will be extended from three to five years and recognized active and
proven directors and officers of TSXV-listed companies will have
their ongoing requirements minimized. There are also proposed
measures to reduce processing time, such as by providing automatic
online filings and implementing a more responsive system for
transaction processing. The TSXV's current escrow requirements
will be replaced by the Canadian Securities Administrator's
national policy on escrow.
Expanding the investor base and enhancing
To attract investors and thereby enhance liquidity, the TSXV
aims to facilitate more direct interaction between investors and
issuers to expand sources of capital, implement an action team of
industry experts to make trading easier for U.S. investors, and
strengthen business development and capital markets education to
increase awareness of the TSXV. Different programs will be
introduced, including new investor analytics programs to enable
greater investor participation and a market making program to
simplify arrangements between issuers and market makers. The TSXV
will engage with the Investment
Industry Regulatory Organization of Canada (IIROC) to
clarify IIROC's suitability standards, which will be further
detailed in an upcoming FAQ document. Other proposed measures
include the simplification of the TSXV's Continued Listing
Requirements and the promotion of additional prospectus exemptions,
such as the existing security holder exemption and proposed dealer
Diversifying and growing the stock list
The TSXV has proposed changes to further diversify the stock
list to increase the exchange's resilience to sector specific
market cycles. To attract new issuers, a SME Sales Team will seek
to bring new companies to the exchange and policies, such as the
capital pool company policy, will be amended to seek to attract
more non-resource companies. There will be more effort to
demonstrate to private equity firms, venture capitalists and angel
investors the value of the TSXV as an effective exit strategy for
early-stage companies. The TSXV will advocate for early-stage
public companies to be eligible for the refundable investment tax
credit under the (somewhat controversial) federal
Scientific Research and Experimental Development Tax
Incentive program. The TSXV will also explore forming
partnerships with other exchanges that could lead to increased
access to capital and liquidity and work with exchange traded fund
firms to develop more investment products that include baskets of
TSXV-listed companies to interest more investors.
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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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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