Reverse Takeovers and Changes of Business Just Got Easier on TSX Venture Exchange


On December 15, 2016 the TSX Venture Exchange (the “Exchange”) published amendments to their Corporate Finance Manual Policy 5.2 – Changes of Business and Reverse Takeovers. The amendments expand an Issuer’s ability to get Exchange approval for reverse takeovers (“RTO”) and changes of business (“COB”) without a shareholder vote, and allow for bridge financing and advances to the acquisition target in more cases.

The amendments include:

  1. The Exchange will not require shareholder approval of a COB or RTO for a transaction that is not a Related Party Transaction where the Issuer is without active operations but in good standing (not subject to a cease trade order and not suspended from trading).
  2. An Issuer may complete a Private Placement after it has entered into a COB Agreement or RTO Agreement, in order to raise funds to pay for the costs associated with proceeding to completion of the proposed COB or RTO (a “Bridge Financing”) if it meets certain conditions.
  3. An Issuer may advance funds to the acquisition target company prior to the completion of the transaction by way of a refundable or non-refundable deposit and/or a secured or unsecured loan, with certain conditions.
  4. The Exchange has indicated its intention to eliminate the general requirement for sponsorship of a COB or RTO. However, as the policy change regarding sponsorship has not yet been formally implemented, the amended Policy 5.2 still includes references to sponsorship. Where sponsorship of a COB or RTO would be required under Policy 2.2 – Sponsorship and Sponsorship Requirements, the Exchange will be amenable to applications to waive the sponsorship requirement in appropriate circumstances.

If you would like more detail about requirements for an RTO or a COB, contact any member of Clark Wilson LLP’s Capital Markets, Securities, Mergers & Acquisitions Group.