Principal listing and maintenance requirements and procedures | TSX Venture Exchange | Cross-Border Listings Guide

Principal listing and maintenance requirements and procedures

[Last updated: 1 January 2024, unless otherwise noted]

Jurisdiction of issuer

There are technically no unacceptable jurisdictions of incorporation for companies seeking to list on the TSXV. However, if an applicant's jurisdiction does not require incorporated companies to provide certain shareholder protections, the TSXV may require certain amendments be made to a company's articles of incorporation (or equivalent document) as a condition of listing. Additional scrutiny may be faced by entities organized in or with principal properties or businesses located in emerging market jurisdictions.

Apart from TSXV regulations, the Canadian federal government also maintains restrictions on economic activities between Canada and certain foreign countries. While the specific extent of the sanctions varies by country, Canada currently maintains sanctions or restrictions against the following countries: Belarus, Central African Republic, China, Democratic People's Republic of Korea, Democratic Republic of the Congo, Haiti, Iran, Iraq, Lebanon, Libya, Mali, Moldova, Myanmar, Nicaragua, Russia, Somalia, South Sudan, Sri Lanka, Sudan, Syria, Tunisia, Ukraine, Venezuela, Yemen and Zimbabwe. While this legislation may not directly prohibit listing on the exchange, it may, depending on the country involved, restrict a foreign company's ability to trade its shares or raise capital through its TSXV listing.

TSXV listing requirements

The TSXV generally does not accept applications for listing of securities of an issuer other than common shares, except where the common shares of that issuer are already listed, or where the common shares and the other class of securities will be contemporaneously listed, on the TSXV.

The TSXV divides applicants, based on standards, including their stage of development, historical financial performance and financial resources, into either Tier 1 or Tier 2. Tier 1 is the TSXV's premier tier and is reserved for the most advanced issuers with the most significant financial resources. Tier 2 is the tier where the majority of the TSXV's listed issuers trade. There are four subcategories under both tiers: mining, oil and gas (exploration or reserves), industrial/technology/life sciences, and real estate or investment.

Tier 2 initial listing requirements

Each Tier 2 applicant must meet requirements concerning its working capital and financial resources, as well as the public distribution of its shares.

Working capital and financial resources. The applicant must have:

Adequate working capital and financial resources to carry out its stated work program or execute its business plan for 12 months following listing.
C$100,000 (approximately US$75,460) in unallocated funds.

Public distribution. The applicant must have:

Public float of 500,000 shares.
200 public shareholders each holding a board lot and having no resale restrictions on their shares.
20% of issued and outstanding shares in the hands of public shareholders.

Also:

Mining. A mining company must have:

A significant interest in a qualifying property or, at the discretion of the exchange, a right to earn a significant interest in a qualifying property.
Sufficient evidence of at least C$100,000 (approximately US$75,460) of approved expenditures by the issuer on the qualifying property within the 36 months before the application for listing.
A work program with an initial phase of no less than C$200,000 (approximately US$150,920), as recommended in a geological report.
A geological report recommending completion of the work program.

Oil and gas (exploration or reserves).

An oil and gas company focusing on exploration must have:

Either (i) an unproven property with prospects or (ii) a joint venture interest and C$5 million (approximately US$3.77 million) raised by a prospectus offering.
A minimum of C$1.5 million (approximately US$1.13 million) allocated by the issuer to a work program, as recommended in a geological report, except where the issuer has a joint venture interest and has raised C$5 million (approximately US$3.77 million) in a prospectus offering.
A geological report recommending completion of the work program.

An oil and gas company focusing on reserves must have:

Either C$500,000 (approximately US$377,300) in proved developed producing reserves or C$750,000 (approximately US$565,950) in proved plus probable reserves.
A satisfactory work program, in an amount of no less than C$226,380 (approximately US$235,480) if proved developed producing reserves have a value of less than C$500,000 (approximately US$377,300) as recommended in a geological report.
A geological report recommending completion of the work program.

Industrial, technology or life sciences. An industrial, technology or life sciences company must have:

C$750,000 (approximately US$565,950) in net tangible assets, C$500,000 (approximately US$377,300) in revenue or C$2 million (approximately US$1.51 million) in arm's length financing.
A significant interest in the business or the primary assets used to carry on the business.
A history of operations or validation of the business.
If no revenue, a two year management plan demonstrating reasonable likelihood of revenue within 24 months.

Real estate or investment.

A real estate company must have:

A significant interest in real property.
Either C$2 million (approximately US$1.51 million) in net tangible assets or C$3 million (approximately US$2.26 million) in arm's length financing.

An investment company must have:

A disclosed investment policy.
50% of available funds allocated to at least two specific investments.
Either C$2 million (approximately US$1.51 million) in net tangible assets or C$3 million (approximately US$2.26 million) in arm's length financing.

Tier 1 initial listing requirements

Each Tier 1 applicant must meet requirements concerning its working capital and financial resources, as well as the public distribution of its shares.

Working capital and financial resources. The applicant must have:

Adequate working capital and financial resources to carry out its stated work program or execute its business plan for 18 months following listing.
C$200,000 (approximately US$150,920) in unallocated funds.

Public distribution. The applicant must have:

Public float of 1,000,000 shares.
250 public shareholders, each holding a board lot and having no resale restrictions on their shares.
20% of issued and outstanding shares in the hands of public shareholders.

Also:

Mining. A mining company must have:

C$2 million (approximately US$1.51 million) in net tangible assets.
A material interest in a Tier 1 property.
A work program with an initial phase of no less than C$500,000 (approximately US$377,300), as recommended in a geological report.
Satisfaction of other Tier 1 property requirements.
A geological report recommending completion of the work program.

Oil and gas (exploration or producing).

An oil and gas company focusing on exploration must have:

C$3 million (approximately US$2.26 million) in reserves, of which a minimum of C$1 million (approximately US$754,600) must be proved developed reserves and the balance probable reserves.
Satisfactory work program of no less than C$500,000 (approximately US$377,300), which can reasonably be expected to increase reserves as recommended in a geological report.
A geological report recommending completion of the work program.

An oil and gas company focusing on production must have:

C$2 million (approximately US$1.51 million) in proved developed reserves.
A geological report recommending completion of the work program.

Industrial, technology or life sciences.

An industrial, technology or life sciences company must have:

C$5 million (approximately US$3.77 million) in net tangible assets or C$5 million (approximately US$3.77 million) in revenue.
A significant interest in the business or the primary assets used to carry on the business.
A history of operations or validation of the business.
If no revenue, a two year management plan demonstrating reasonable likelihood of revenue within 24 months.

Real estate or investment.

A real estate company must have:

C$5 million (approximately US$3.77 million) in net tangible assets.
A significant interest in real property.

An investment company must have:

C$10 million (approximately US$7.55 million) in net tangible assets.
A disclosed investment policy.

Sponsorship

Subject certain exemptions, TSXV applicants must be sponsored by a Participating Organization. Such organizations are required to complete what is basically a due diligence report on the applicant. Foreign issuers are generally required to be subject to a higher degree of due diligence than domestic issuers. Although the scope and extent of the due diligence will vary in each circumstance, the review typically includes, among other things, an assessment of the issuer's:

Directors and managers.
Business operations and plans.
Working capital to determine its adequacy to carry on out least 12 months of operations and any other stated purposes.
Material contracts.

Sponsorship is not required under certain circumstances, including where one of the following applies:

The issuer's application is made pursuant to an IPO and the prospectus is executed by at least one member of the TSXV.
The issuer is not a foreign issuer, is in a specified mining or oil and gas issuer category, and its management collectively possess an appropriate level of experience, qualifications and history according to specific criteria.
The issuer makes appropriate disclosures according to specific criteria and either a major financial institution is involved or the issuer conducts a concurrent brokered financing of at least C$500,000 (approximately US$377,300) in connection with the transaction and the agent for that transaction has provided the TSXV with confirmation that it has completed appropriate due diligence.

Requirements for continued listing

Tier 2.

A Tier 2 issuer, regardless of its industry segment, will be able to satisfy the public distribution and market capitalization tests if:

At least 500,000 listed shares are in the public float.
10% of listed shares are in the public float.
The listed shares within the public float have a minimum market capitalization of C$100,000 (approximately US$75,460).
At least 150 public shareholders hold at least one board lot each, free of any resale restrictions.

With respect to working capital or financial resources, a Tier 2 issuer is expected to have the greater of C$50,000 (approximately US$37,730) and the amount required to maintain operations and cover general and administrative expenses for a period of six months.

The TSXV will retain discretion to determine eligibility for continued listing in situations where the Tier 2 issuer or its principal operating subsidiary substantially reduces or impairs its principal operating assets, ceases or discontinues a substantial portion of its operations or business for any reason, or seeks protection from or is placed under the protection of any bankruptcy or insolvency law or is placed into receivership.

A Tier 2 resource issuer (mining or oil and gas issuers) will need to satisfy either of the following activity tests:

For its most recently completed financial year, positive cash flow, significant operating revenue, or C$50,000 (approximately US$37,730) of exploration or development expenditures.
For its two most recently completed financial years, C$100,000 (approximately US$75,460) of exploration or development expenditures.

A Tier 2 non-resource issuer (industrial, technology, life sciences, real estate or investment industry) will need to satisfy either of the following activity tests:

For its most recently completed financial year, either positive cash flow, C$150,000 (approximately US$113,190) of operating revenues or C$150,000 of expenditures relating to the development of its assets or business.
For its two most recently completed financial years, C$300,000 (approximately US$226,380) of operating revenues or C$300,000 of expenditures directly relating to the development of its assets or business.

If a Tier 2 issuer fails to meet the minimum requirements for continued listing, there is the possibility that it may continue to list on the NEX, a separate trading board of the TSXV that provides a trading forum for issuers that have fallen below the TSXV's ongoing listing standards.

Tier 1.

A Tier 1 issuer from any industry segment will be able to meet its continued listing requirements if it continues to meet the Tier 1 initial listing requirements applicable to its industry segment.

Corporate history

There are no specific requirements with respect to trading or operational history that a foreign company must demonstrate to list its securities on the TSXV. However, in the initial listing requirements for some listing categories for the TSXV, a company must provide details regarding its operational history.

Even if a company meets the minimum requirements of the TSXV, subject to specified exemptions, TSXV applicants must be sponsored by a Participating Organization. As discussed above, such organizations are required to complete what is basically a due diligence report on the applicant - a process that will likely involve an investigation of the company's trading/operational history.

Ownership

The TSXV does not mandate any ownership requirements in the listing of a foreign company's securities. However, there are a number of restrictions set by both federal and provincial law with respect to foreign investments in Canada.

For example, under the Investment Canada Act (ICA), acquisitions of control of Canadian businesses are either notifiable (which, generally, may be done post-closing) or reviewable pre-closing and foreign investments to establish new businesses are notifiable. Generally, direct acquisitions of a Canadian business with assets greater than C$5 million (approximately US$3.77 million) and the indirect acquisition of a Canadian business with assets greater than C$50 million (approximately US$37.73 million) by a foreign investor, that is not from a World Trade Organization (WTO) member country, are subject to pre-closing foreign investment review and approval. However, direct acquisitions involving WTO member countries or acquisitions by investors from European Union member states as well as the United States of America, Mexico, United Kingdom, Chile, Peru, Colombia, Panama, Honduras and South Korea (Trade Agreement Investors) benefit from higher thresholds. Such threshold for direct acquisitions by Trade Agreement Investors that are not state-owned enterprises is currently C$1.93 billion (approximately US$1.46 billion) in enterprise value. For direct acquisitions involving other WTO investors that are not state-owned enterprises the threshold is currently C$1.29 billion (approximately US$973.43 million) in enterprise value. Indirect acquisitions by WTO investors are subject to notification only. Reviewable investments by non-Canadians are subject to a “net benefit” to Canada test, and undertakings or other conditions of approval generally apply. Particular rules also apply to investments involving state-owned enterprises and cultural businesses.

In addition, there are certain industry-specific restrictions on foreign ownership with respect to broadcasting, and for radio communications and telecommunications carriers that exceed a revenue threshold. There are also federal or provincial regulations with respect to foreign investments in aviation, book publishing and selling, collection agencies, engineering, farming, fisheries, liquor sales, mining, oil and gas, optometry, pharmacies, banking, insurance and financial services.

Finally, the Minister of Innovation, Science and Industry has broad powers to examine any investment in Canada made by a non-Canadian on the basis of national security.

Management

Before the TSXV will accept the initial listing of an applicant, certain individuals associated with the applicant are required to complete a personal information form. For TSXV applicants, this form must be completed by each director, officer, other insider or any person who beneficially owns or controls, directly or indirectly securities carrying greater than 10% of the voting rights attached to all outstanding voting securities of the applicant, and each person that is or will be a promoter or providing investor relations, promotional or market maintenance services for the applicant, as well as any individual requested by the TSXV or a securities regulatory authority. The TSXV will not accept an application unless these individuals meet a number of basic competency requirements.

Overall, in the initial application stage, an applicant must demonstrate that its management team has the capacity to fulfil the corporate governance requirements expected of listed companies. This means, for example, that the management team is shown to be experienced and balanced, with sufficient directors and senior executives with a proven record in managing public companies. Furthermore, it is expected that management demonstrate a "public company mindset," particularly with regard to financial reporting, by eliminating such things as any questionable accounting policies.

Share price

A TSXV listed issuer is obliged to sell any securities in its initial public offering for a minimum of C$0.05 (approximately US$0.04) per security (certain exceptions apply). Furthermore, if the TSXV determines that an issuer has issued shares to any person at an effective price of less than C$0.05 (approximately US$0.04) per share prior to the proposed new listing, the exchange may request additional information from or action on the part of the issuer including amendments to the issuer's capital structure, before approving an application for listing.

Escrow

TSXV listing applicants are generally required to have securities issued to principals escrowed or subject to hold periods. The exchange can also require that any securities held by other parties be escrowed on the same terms as the principals or otherwise.

Public float

At the time of listing.

A Tier 2 company must have:

A public float of 500,000 shares.
200 public shareholders, each holding a board lot and having no resale restrictions on their shares.
20% of issued and outstanding shares in the hands of public shareholders.

A Tier 1 company must have:

At least 1 million listed shares in the public float.
250 public shareholders, each holding a board lot and having no resale restrictions on their shares.
20% of issued and outstanding shares in the hands of public shareholders.

After listing.

As mentioned above, a Tier 2 company may be delisted unless:

At least 500,000 listed shares are in the public float.
10% of listed shares are in the public float.
Listed shares within the public float have a minimum market capitalization of C$100,000 (approximately US$75,460).
At least 150 public shareholders hold at least one board lot each, free of any resale restrictions.

The public float requirements after listing for a TSXV Tier 1 issuer are the same as the initial listing requirements.

Interviews

A foreign company seeking to list on the TSXV is not specifically obligated to carry out one or more interviews with the exchange. However, the TSXV's investigations and application review process may require it. In any case, the sponsorship process likely involves one or more interviews between the sponsor and the applicant.

Corporate history

Even if a company meets the minimum requirements of the TSXV, subject to specified exemptions, TSXV applicants must be sponsored by a Participating Organization. As discussed earlier, such organizations are required to complete what is basically a due diligence report on the applicant¾a process that will likely involve an investigation of the company's trading/operational history.

Currency, agents and advisers

The TSXV lists securities in either Canadian or US dollars.

The TSXV maintains a list of "acceptable" transfer agents, registrars and escrow agents. While an issuer may select a transfer agent not on this list, such an agent must be reviewed by the TSXV.

Initially, as discussed above, TSXV applicants may be required to have their application sponsored by an acceptable Participating Organization. However, once a company is listed, there is no requirement to obtain a compliance adviser.

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