Corporate Finance Update: Canadian Developments For 2014


In 2013, our principal stock exchanges and securities regulators updated requirements for listings and raising capital and proposed further changes in these areas. This bulletin summarizes some of those changes and how they may affect your company in 2014.


    If your company is considering listing on the TSX or the TSX-V in 2014, you should be aware of the following recent and proposed changes to the TSX Company Manual and the TSX-V Corporate Finance Manual.

    1. Guidance for Companies Seeking a TSX Listing

      In November 2013, the TSX provided guidance in three areas:

      Pricing of Stock Options Granted Prior to an Initial Public Offering: If you are doing an initial public offering (IPO) and priced your options at a discount to the IPO price during the three months immediately prior to filing your preliminary prospectus, the TSX will likely require that your options be cancelled, forfeited or re-priced to the IPO price as a condition to listing. Where you have recently completed a material financing to arm's length parties and the exercise price of your options is not lower than the price at which you sold those securities, the TSX may consider accepting the options at their exercise price. Guidance Relating to Financial Statements: Forecast Financial Statements: If you are applying to list under the "forecasting profitability" category, you must meet certain financial tests supported by forecast financial statements and an independent auditor's opinion. If the audited forecast is not published in a prospectus or other disclosure document, and is not subject to the requirements of future-oriented financial information (FOFI) set out in applicable securities laws, the TSX will require that you engage a sponsor to review and comment on the audited forecast and other related FOFI presented with the listing application. Pro Forma Financial Statements: If your company is completing an acquisition or disposition of assets in connection with (or proximate to) its listing, the TSX may require pro forma financial statements to assess whether your company meets the original listing requirements. As there are no generally accepted accounting standards in Canada regarding the preparation and presentation of pro forma financial statements, and it is generally not feasible for an auditor to provide an audit opinion or other form of assurance for pro forma financial statements, the TSX will review and comment on your pro forma statements to ensure they reflect the transaction. Accounting Standards: The TSX...

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