The TSX Venture Exchange (the "TSXV" or the "Exchange") issued a bulletin on April 8, 2020 announcing temporary relief measures (the "Temporary Relief") from certain pricing requirements of the TSXV's Corporate Finance Manual (the "Manual"). The Temporary Relief has been initiated in response to the COVID-19 pandemic to revise the minimum pricing requirements of certain financings on the TSXV.

The minimum price at which shares listed on the TSXV ("Listed Shares") may be issued was lowered from $0.05 to $0.01 in certain circumstances. If the market price of an issuer's Listed Shares is less than or equal to $0.05, the minimum price at which that issuer may issue Listed Shares is equal to that market price, subject to a minimum price of $0.01. If the market price of an issuer's Listed Shares is greater than $0.05, the minimum price at which that issuer may issue Listed Shares remains equal to the market price less existing allowable discounts, subject to a minimum price of $0.05.

Note that the Temporary Relief does not extend to incentive stock options, warrants and convertible securities, which remain subject to the minimum $0.05 exercise/conversion price requirement in accordance with the Manual.

The Temporary Relief will be in full force and effect and will apply to Listed Shares issued on or before September 30, 2020.

Private Placement Financings

Under Policy 4.1 – Private Placements of the Manual, the offering price for a financing involving the issuance of Listed Shares must not be less than the applicable discounted market price, which includes a minimum price of $0.05. Pursuant to the Temporary Relief, the minimum offering price is revised from $0.05 to $0.01 in certain circumstances where the market price of an issuer's Listed Shares is less than or equal to $0.05.

Public Offerings

Under Policy 4.2 – Prospectus Offerings of the Manual, the offering price of an issuer's Listed Shares is generally the market price at the date of the final receipt for the prospectus, and must not exceed a 20% discount to the market price and not be less than $0.05. Under the Temporary Relief, the minimum offering price is revised from $0.05 to $0.01 in certain circumstances where the market price of the issuer's Listed Shares is less than or equal to $0.05.

Under Policy 4.6 – Public Offering by Short Form Offering Document of the Manual, the price for the securities offered cannot be less than the greater of: (a) the closing price of the Listed Shares on the trading day before the news release disclosing the Short Form offering is disseminated, less a discount of 10%; and (b) $0.05 per share or unit. Under the Temporary Relief, the minimum offering price is revised from $0.05 to $0.01 in certain circumstances where the market price of the issuer's Listed Shares is less than or equal to $0.05.

Shares for Debt

Under Policy 4.3 – Shares for Debt of the Manual, the minimum deemed price at which debt may be converted into Listed Shares must not be less than the applicable discounted market price, which includes a minimum price of $0.05. Under the Temporary Relief, the minimum deemed price at which debt may be converted into listed shares is revised from $0.05 to $0.01 in certain circumstances where the market price of the issuer's Listed Shares is less than or equal to $0.05.

Bonus Shares and Warrants

Under Policy 5.1 – Loans, Loan Bonuses, Finder's Fees and Commissions of the Manual, the calculation of the number of Listed Shares and warrants that may be issued as a bonus for a loan or guarantee is calculated using the market price of the Listed Shares, which includes a minimum of $0.05. Under the temporary relief, that minimum is revised from $0.05 to $0.01 in certain circumstances where the market price of the issuer's Listed Shares is less than or equal to $0.05.

NEX Policy

Under the TSXV's NEX Policy, all share issuances are subject to the same price protection mechanisms and pricing policies applicable to such transactions on the TSXV, including the minimum issuance price of $0.05 for shares. Under the Temporary Relief, that minimum issuance price for any financings and shares for debt transactions is revised from $0.05 to $0.01 in certain circumstances where the market price of the issuer's Listed Shares is less than or equal to $0.05.

Applicability Criteria

An issuer may only rely upon the Temporary Relief where all of the following applicable criteria are satisfied:

  1. the proposed price is protected/reserved by way of a news release and not a Form 4A – Price Reservation Form;
  2. the aggregate number of listed shares of an Issuer that are issued under the Temporary Relief at a price or deemed price that is below $0.05 is not more than 100% of the number of listed shares of the Issuer which are outstanding, on a non-diluted basis, on April 7, 2020;
  3. the proceeds of any financing will not primarily be used to pay management fees or for investor relations activities;
  4. the issuer will fully disclose to the public at the time of announcement of any financing and at the time of closing of any financing the proposed use of proceeds of the financing, including any proposed payments to any related parties of the issuer; and
  5. in addition to any applicable resale restrictions under applicable securities laws, all securities issued under the Temporary Relief at a price or deemed price that is below $0.05 are subject to the Exchange Hold Period as set out in TSXV Policies 1.1 and 3.2 and must be legended accordingly.

Incentive Stock Options and other Convertible Securities

The Temporary Relief does not apply to incentive stock options, warrants and other convertible securities, which remain subject to the minimum $0.05 exercise/conversion prices and all other requirements and restrictions set out in the TSXV's Manual.

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.