I. Introduction
On May 13, 2024, the TSX Venture Exchange (the "TSXV") announced the launch of TSXV Sandbox, a Venture Forward initiative focused on driving innovation and growth. This initiative seeks to pave the way for new companies and investors to join the capital markets ecosystem in Canada.
II. Background
i. Venture Forward Program
The goal of the Venture Forward program is to strengthen the early-stage company ecosystem, fuel primary growth, and provide investors with access to different small-cap investment opportunities. The Venture Forward program aims to determine the ecosystem's challenges and opportunities and construct a comprehensive action plan to achieve long-term success in the Canadian public venture market.
ii. TSX Sandbox
On April 12, 2019, the Toronto Stock Exchange ("TSX") introduced an initiative to provide an alternative path to a stock exchange listing or listing of other securities by existing listed issuers for certain qualifying companies; an initiative the TSX coined to be the "TSX Sandbox". Four years later, its younger sibling, the "TSXV Sandbox" was born.
III. Framework
The TSXV Sandbox initiative gives the TSXV greater flexibility to waive more substantial listing requirements in order to accept applications that may not meet current requirements due to unique circumstances. The TSXV Sandbox aims to enhance innovation by promoting the listing of unique new businesses and transaction structures, expanding applicant access to TSXV markets, and enabling investors to finance a broader range of inventive ventures. The TSXV will continue to uphold its listing standards, as the overarching goal of the TSXV Sandbox remains to facilitate the listing of high-quality and distinctive businesses.
IV. Eligibility
The TSXV Sandbox does not have a set list of eligibility criteria, as it maintains the discretion to accept meritorious applications under a TSXV listing, tailoring its approach to each applicant. Only new listing and new listing transactions may qualify for the TSXV Sandbox. Therefore, an issuer already listed on TSXV is not eligible to apply to TSXV Sandbox for a proposed private placement.
V. Listing under the Standard Regime vs. in the Sandbox
The primary difference between listing under the current waiver and discretion process and listing under the TSXV Sandbox lies in the extent that listing requirements may be modified.
Under the current process, the TSXV may use its discretion to adjust or waive certain listing requirements if other parts of the application are more advanced. For example, Prior Expenditure requirements might be waived for Tier 2 mining issuers if they have advanced Qualifying Property, and a significant phase 1 exploration program is recommended. Under the TSXV Sandbox, more considerable listing requirements can be waived or modified. For example, a mining issuer may be listed that has a Qualifying Property that is greatly advanced and that has a significant cash balance but does not meet the listing requirements for Working Capital and Financial Resources due to short term credit facilities and/or substantial capital expenditure needed to complete production. In such cases, the TSXV would contemplate applying certain conditions to the TSXV Sandbox listing until the issuer is able to adequately complete financing or restructuring of its balance sheet.
VI. Application — Factors to Consider
When deciding whether to apply to the TSXV Sandbox, issuers should consider the following information:
- The TSXV actively collaborates with high-quality companies whose listing proposals do not meet published policies to thoroughly understand their individual situations when deciding whether and how they can utilize their discretion in applying their policies;
- To apply for the TSXV Sandbox, issuers or their advisors are recommended to contact their nearest TSXV listings team. The TSXV will discuss the listing proposal with you and help determine whether issuers should pursue an application for listing through the TSXV Sandbox;
- If the TSXV accepts an application, they may impose conditions to support listing under exceptional circumstances. Conditions imposed by the TSXV will be customized to fit the unique circumstances of the listing. These conditions could include enhanced disclosure, vesting requirements, security-based compensation limitations, and a distinct escrow regime; and
- Regular listing fees apply, and no additional fees are charged.
VII. Conclusion
The launch of the TSXV Sandbox is set to encourage innovation and provide support for the listing of novel companies or transaction structures. The TSXV Sandbox will provide a defined and transparent forum to consider more exceptional and unique entrances to the capital markets. High quality issuers from all sectors and at all stages of their business growth are encouraged to apply to TSXV Sandbox if they do not fit squarely within the TSXV standard listing regime. If you would like to discuss the TSVX Sandbox or for any further information, please contact any member of our Securities and Capital Markets Group.
Originally published May 31, 2024.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.