The TSX Venture Exchange (TSXV) published the Venture Forward Report in June 2023 which outlined four key commitments the TSXV was making in order to strengthen Canada’s public venture ecosystem. In mid-December 2023, the TSXV followed up on its first commitment and launched the TSXV Passport Listing Process (Passport Process).
The Passport Process is a response to the evolving dynamics of the market, aimed at creating faster pathways for advanced applicants to go public, raise capital, and achieve liquidity, all while upholding TSXV listing standards.
Pre-Filing Matters
An applicant seeking to list on the TSXV via the Passport Process must submit a pre-filing letter to the TSXV with detailed analysis evidencing its ability to meet the following eligibility criteria:
Listing Requirements
Satisfaction of the TSXV initial listing requirement applicable to the applicant as outlined in TSXV Policy 2.1 – Initial Listing Requirements, without requiring any waivers to such requirements.
A minimum of $500,000 in unallocated funds.
Either (a) completion of a minimum $10 million majority arm’s length equity financing in connection with the listing application; or (b) a market capitalization of at least $50 million at the time of listing and (i) a minimum of $5 million of revenue in the most recently completed financial year; or (ii) completion of a majority arm’s length equity financing representing not less than 10% of the number of issued and outstanding shares at the time of listing.
Financial Statements
Identification and supporting analysis regarding the financial statements proposed to be included in the applicant’s disclosure documents, including the expected level of auditor engagement.
Directors and Officers
Satisfaction of requirements of directors and officers outlined in TSXV Policy 3.1 – Directors, Officers, Other Insiders & Personnel and Corporate Governance.
A majority of directors and officers: (a) have at least a two-year positive track record with companies listed on the Toronto Stock Exchange or the TSXV during the ten years preceding the listing application; and (b) are resident in Canada or the United States of America.
The Chief Financial Officer has a Certified Public Accountant designation or at least two years recent experience as Chief Financial Officer of a public company.
Where the applicant is seeking to list on the TSXV pursuant to a Qualifying Transaction, Reverse Takeover or Change of Business (as such terms are defined in TSXV Policy 2.4 – Capital Pool Companies or TSXV Policy 5.2 - Changes of Business and Reverse Takeovers, as applicable), the applicant must also confirm that such transaction is not a Related Party Transaction (as such term is defined in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions) and that all information required to be included in a comprehensive news release is available.
It is important to note that “Emerging Market Issuers” (as such term is defined in TSXV Policy 2.10 – Listing of Emerging Market Issuers) are not eligible to participate in the Passport Process.
As part of the process to determine eligibility, applicants are also required to attend a pre-filing meeting with the TSXV. The TSXV will confirm whether or not the applicant is eligible to make an application through the Passport Process within three business days of such pre-filing meeting.
Application Process
Following confirmation that the applicant is eligible to make an application through the Passport Process, the applicant is required to submit a detailed TSXV Passport Initial Submission Letter (Initial Submission Letter) requesting that the application be reviewed under the Passport Process and discussing the applicant’s eligibility criteria. The TSXV has published a sample Initial Submission Letter than can be used by applicants.
The Initial Submission Letter must be accompanied by a draft of the disclosure document and other disclosure materials including financial statements, a completed Form 2J, applicable personal information forms or declarations, copies of all material agreements, geological reports prepared in accordance with applicable securities laws (if the applicant is a mining or oil and gas issuer) and title and/or corporate opinions (if the applicant’s Principal Properties (as such term is defined in TSXV Policy 1.1 – Interpretation) or assets are located outside of Canada or the United States). A filing fee of $10,000 (plus tax) must also be paid by the applicant.
Following the filing of the Initial Submission Letter and all other required application materials, the TSXV will conducts its review on an expedited basis, providing a first comment letter within five to seven business days and concurrently scheduling a meeting to discuss such comments with the applicant. The TSXV will also schedule ongoing status meetings thereafter to discuss the application. Applicants must promptly respond to TSXV staff comments; applicants that have prolonged response times to TSXV staff, or material challenges in meeting TSXV listing requirements, may have their continued eligibility under the Passport Process reviewed.
While the Passport Process requires more upfront effort by applicants than the TSXV’s standard listing application process, eligible applicants should experience increased efficiencies, faster transaction timelines, and reduced costs.
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DISCLAIMER: This post is intended to convey general information about legal issues and developments as of the date above. It does not constitute legal advice and must not be treated or relied on as such.