On May 22, 2025, the Canadian Securities Exchange (“CSE“) received approval from the Ontario Securities Commission and British Columbia Securities Commission to amend (the “Amendments“) its policy manual (the “CSE Policies“) to introduce, amongst other things, formal resale restrictions on all prospectus-exempt issuances of listed securities, except issuances by NV Issuers (as defined in CSE Policies)1, that might not otherwise have a hold period under applicable securities laws. These Amendments came into force with immediate effect.
The first of such resale restrictions is known as an “Exchange Hold”, which is newly defined in the amended CSE Policy 1.3. An Exchange Hold constitutes a resale restriction imposed by the CSE for a period of four months, which may run concurrently with — but does not replace — any restrictions under applicable securities laws.
The newly imposed Exchange Hold is codified in section 6.1(4)(a) of CSE Policy 6, which now reads:
“…where listed securities are issued by an issuer other than an NV Issuer pursuant to a prospectus exemption, the listed securities are subject to an Exchange Hold commencing on the date of issuance of the securities unless written approval to issue the securities without the hold period is obtained from the CSE.”
Exceptions:
Section 6.1(4)(b) of CSE Policy 6 outlines several key exemptions to the application of an Exchange Hold, in addition to the general exemption for NV Issuers (as defined in CSE Policies). The Exchange Hold will not apply where:
- Acquisition or Business Combination: “the listed securities are issued…as consideration for an acquisition or in connection with a business combination, only if prospectus level disclosure about the assets or target company is available in the form of an information circular, listing statement, or take-over bid circular”;
- Financing or Debt Settlement: “the listed securities are issued…in a financing or debt settlement, only if the price of the securities is equal to or greater than the closing price or alternative price established in accordance with 6.2(2)” of CSE Policy 6;
- Other Exempt Issuances: the listed securities are issued pursuant to a prospectus exemption applicable to circumstances other than (1) and (2) above for which disclosure is made in the form of an offering document or circular as prescribed under securities laws; or
- Disclosure Document: the issuer posts a disclosure document that is acceptable to the CSE.
Discretionary Application of Resale Restrictions:
As part of the Amendments, the CSE has retained discretionary authority to impose an Exchange Hold. The Amendments state that notwithstanding section 6.1(4)(b) of Policy 6, the CSE may consider factors such as the relationship between the issuer and the recipient of the securities, the number and price of securities to be issued, the transaction's value, and other relevant contextual elements, in determining whether to impose an Exchange Hold or an “Extended Hold”.
An “Extended Hold” is a second newly added resale restriction, which is defined in CSE Policy 1.3 as a resale restriction imposed by the CSE for a period longer than four months.
The Amendments state that if a transaction is subject to the additional disclosure required by the newly added section 8.3(b) of CSE Policy 8, or if the CSE is of the view that an Extended Hold is appropriate in the circumstances, an Extended Hold may be applied. Securities subject to an Extended Hold will only be freely tradeable after a minimum of 10 days after the additional disclosure required by section 8.3(b) of CSE Policy 8 is posted or any such longer period as the CSE may deem appropriate.
Section 8.3(b) of Policy 8 states that additional disclosure, including financial disclosure, may be required for a transaction that does not otherwise meet the criteria of a Fundamental Change (as defined in CSE Policies). Section 8.1 of CSE Policy 8 requires issuers contemplating a transaction or series of transactions that may be a Fundamental Change (as defined in CSE Policies) or Change of Business (as defined in CSE Policies) to consult with the CSE at an early stage to determine how the CSE will characterize the transaction. The addition of section 8.3(b) gives the CSE the flexibility to determine that a proposed transaction may still be significant enough to warrant an Extended Hold and additional disclosure despite not qualifying as a Fundamental Change (as defined in CSE Policies) e.g., shares issued as consideration for an acquisition of a business or asset where the CSE determines that resale restrictions would be appropriate until financial disclosure is made available.
Enhanced Disclosure Obligations:
To ensure that market participants are properly informed of resale conditions, the Amendments also impose the following enhanced disclosure mandates:
- All news releases announcing a financing or issuance of securities must now include a description of any Exchange Hold or Extended Hold, or lack thereof, on the securities to be issued (see section 6.1(e) of CSE Policy 6); and
- On the closing of private placements and acquisitions, CSE issuers must submit written confirmation that a resale restriction, including an Exchange Hold or Extended Hold, has been imposed (see sections 6.2(7)(d) and 6.3(3)(d) of CSE Policy 6, respectively) (this is in addition to the requirement in section 2.12(2)(ix) and (x) of CSE Policy 2 to include a legend on the document evidencing the securities).
For more detailed information, please refer to the official notice: Notice of Approval — May 22, 2025.
Footnote
1. An NV Issuer is an issuer that has any of its securities qualified for listing on the CSE, and either meets one of the below noted criteria or is designated an NV Issuer by the CSE as a result of being near the threshold of at least two of the below noted criteria (see 2A.4(2) of Appendix 2A: Equity Securities of the CSE Policies):
- Equity Standard: shareholder's equity of at least $5 million and a market value of the public float of at least $10 million;
- Net-Income Standard: net income of at least $400,000 from continuing operations in its most recent fiscal year, or in two of its three most recent fiscal years, shareholders' equity of at least $2.5 million and a market value of the public float of at least $5 million;
- Market Value Standard: the market value of all securities, including those securities to be listed and any class convertible into those securities, but excluding warrants and options, is at least $50 million; shareholders' equity of at least $2.5 million including the value of any offering concurrent with listing; and expected market value of the public float of at least $10 million; or
- Assets and Revenue Standard: total assets and total revenues of at least $50 million each in the most recent fiscal year or in two of three of the most recent fiscal years; and expected market value of the public float of at least $5 million.
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