Close of businesswoman making announcement in paper trumpet
123RF

Amid a recent drop in public listings, the TSX Venture Exchange (TSXV) is revamping its junior shell company program.

The venture exchange announced a series of planned changes to its long-running capital pool company (CPC) program that will take effect on Jan. 1, 2021.

The changes are intended to improve both the flexibility and the economics of CPC vehicles, while also reducing regulatory barriers, the TSXV said.

Among other things, the exchange said that the changes will relax requirements on shareholder distributions and shareholder approvals, ease residency restrictions and simplify spending restrictions.

The changes are being adopted “following extensive consultation with stakeholders across the TSXV community,” the exchange said.

According to the the exchange, there have been over 2,600 CPCs created since the program was introduced at TSXV predecessor, the Alberta Stock Exchange, in 1986 (CPCs were originally known as junior capital pool companies).

Over that time, more than 2,200 qualifying transactions have been completed, the TSXV reported. “Former CPCs have raised over $75 billion in equity capital on TSX and TSXV,” the exchange said.

However, in recent years, the use of CPCs has declined, sparking concern on Bay Street.

An Ontario task force examining securities regulation has indicated that it plans to propose several changes designed to rejuvenate listings activity, and to facilitate the growth of the independent investment dealer industry that has traditionally led the junior market.

That task force is due to release its final recommendations later this month.

In the meantime, the TSXV will be hosting virtual events on December 8 and 9 to review the forthcoming changes to its CPC program.