TSX-V relaxes certain minimum pricing and capital structure requirements

The TSX-V recently announced changes to certain minimum pricing, shareholder approval and other requirements intended to better facilitate access to capital and listing transactions.

A number of the amendments take the form of reductions to minimum acceptable prices for certain types of securities issuances. Specifically, the amendments reduce the minimum acceptable exercise price for share purchase warrants and incentive stock options from $0.10 to $0.05 per share, reduce the minimum acceptable conversion price for debentures from $0.10 to $0.05 per share and reduce the minimum acceptable offering price for a non-Capital Pool Company IPO from $0.15 to $0.10 per security.

In addition, the TSX-V has also relaxed shareholder approval requirements for share consolidations to only require shareholder approval if the consolidation, when combined with any other consolidation conducted by the issuer within the previous two years that was not approved by the issuer's shareholders, would result in a cumulative consolidation of greater than 10 to 1 over that two year period.

Since the policy amendments became effective concurrent with their publication on August 14, the TSX-V notice also sets out transitional provisions applicable to in-progress transactions pursuant to which in-progress transactions will generally be able to benefit from the amended rules.

Notably, as part of its transition provisions, the TSX-V has stated that issuers may apply to have existing incentive stock options re-priced to benefit from the new lower minimum exercise price. Under TSX-V Policy 4.4 - Incentive Stock Options, amendments to the exercise price may be subject to disinterested shareholder approval and a six-month exchange imposed hold period. Under the transitional provisions, the TSX-V may provide relief from these requirements where an application is made to reprice options granted between January 1, 2013 and August 14, 2013 provided the revised exercise price is not less than the discounted market price (calculated under the TSX-V’s amended rules) both at the time of grant and the time the application for repricing is accepted. Further, any such application must be received by the TSX-V by January 31, 2014. Transitional provisions are also provided for repricing of existing share purchase warrants.

While these changes generally apply across the board, the TSX-V notice reminds issuers that additional requirements under Policy 2.4 - Capital Pool Companies will also continue to apply, including restrictions on the issuance of warrants and debentures prior to the completion of a CPC qualification transaction. Amended TSX-V policies reflecting the new policy amendments are available from the TSX-V website, including the amended Policy 4.1 - Private Placements.

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