TSXV Changes Initial and Continuing Listing Requirements


Effective June 14, 2010, the TSX Venture Exchange (“TSXV”) rules for initial and continued listing on the exchange will change in both name and substance. Current “Minimum Listing Requirements” (“MLR”) will become “Initial Listing Requirements” (“ILR”) and “Tier Maintenance Requirements” (“TMR”) will be renamed “Continued Listing Requirements” (“CLR”). The purpose of the changes is to streamline the listing requirements and to give Tier 1 listed companies a higher status than they currently enjoy, making a bigger distinction from Tier 2 issuers. The following are some of the changes that will affect many TSXV listed issuers.

Tier 2 initial requirements move from $500,000 in net tangible assets for technology or industrial issuers and $2,000,000 for investment issuers under MLR to the new ILR requirements of $500,000 in revenues for industrial, technology or life sciences issuers or $750,000 in net tangible assets and $3,000,000 in assets or arm’s length financing for real estate and investment issuers. Conversely, industrial, technology and life sciences issuers no longer have a requirement for prior expenditures; they must only have a history of operations or other validation of their business. The research and development category of issuer will no longer be recognized as a separate issuer category.

For Tier 2 industrial or technology issuers, they will have to show a two year management plan demonstrating a reasonable likelihood of revenue within 24 months. For all Tier 2 issuers, they must have adequate working capital to carry out their stated work program and execute their business plan for 12 months and have an additional $100,000 in unallocated funds. To maintain a listing, a Tier 2 issuer must at all times have sufficient capital or financial resources of the greater of 1) $50,000 and 2) the amount necessary to cover operations for six months.

“Dormant” listed issuers will no longer be allowed. Starting June 14, 2010 and looking forward, all Tier 2 resource issuers must spend at least $50,000 each year in exploration and development or $100,000 in each two year period. The TSXV say they will review issuers’ audited financial statements at least every two years to ensure this requirement is maintained by each resource issuer. The TSXV will not expect this rule to apply for periods prior to June 14, 2010.

Tier 1 ILR moves up to $3,000,000 in reserves for oil and gas issuers, and $3,000,000 in assets for investment issuers. Tier 1 issuers must at all times meet the public distribution CLR, which are now the same as ILR, of one million shares in the public float, 250 shareholders each having a board lot, and at least 20% of the issued shares being owned by public shareholders. These and other new rules are expected to result in downgrades of several Tier 1 companies to Tier 2.

Some changes streamline filings for issuers or permit greater flexibility. For example, anything filed on SEDAR will no longer have to be filed separately with the TSXV. Warrants may be extended to five years from their original issue date, even if they were originally issued with a shorter expiry. Stock options granted under rolling stock option plans with an exercise price granted at the market price will not have a TSXV hold period imposed, resulting in no hold period for stock options for most TSXV issuers.

The changes indicated in this article are just some of the many TSXV rule changes that take effect on June 14, 2010. If you have any questions about the TSXV new listing requirements or rules, contact any member of Clark Wilson LLP’s Corporate Finance & Securities Group.