The following is a general overview of key aspects of the Toronto Stock Exchange (TSX) and TSX Venture listing processes, with links to relevant documents that are either online or included below. This summary includes an example transaction, Ballard Power Systems, which is a fuel cell company that completed a US$550MM share issuance in 2021.
Contents
TSX/TSXV Listing Process
TSX/TSXV Listing Types
Listing – General Process
Sponsors
Member Firms / Advisors List
Finding Partners – Recent TSX/TSXV Listings
Listing Requirements
Listing costs
Listing Process Timeline
Example Transaction – Ballard Power Systems
Company Description
Underwriters
Documents
General Guides
Recent TSX/TSXV Listings
TSX/TSXV Listing Process
TSX/TSXV Listing Types
There are several ways to list in Canada and on the two main stock exchanges, the TSX Exchange, and TSX Venture Exchange, which are both owned by the TMX Group. (https://www.tsx.com/listings/listing-with-us/listing-guides/ways-to-list). Note: there is also the Canadian Securities Exchange (>$5 billion raised over last twelve months) but it is beyond this scope of this document.
The relevant TSX/TSXV listing options are CPC, IPO, or Reverse Take-Over, with all types as follows:
Capital Pool Company (CPC) Program - It is the most common way that companies go public on TSX Venture Exchange. Maximum of $1MM seed financing and $10MM in proceeds from IPO. A private company is matched with a CPC.
General Guide: https://www.tsx.com/listings/listing-with-us/listing-guides/ways-to-list/capital-pool-company-cpc-program#reasons
IPO
Direct Listing (i.e., already listed on another stock exchange)
Reverse Take-Over
Graduation (TSXV to TSX)
SPAC (Special Purpose Acquisition Companies) – Note: Not very active in Canada; more of a phenomenon in the United States. There was a wave of Canadian cannabis SPACs but not very successful.
Listing – General Process
The listing process differs for the TSX and TSXV. The TSXV is focused on early stage and emerging companies, while larger companies are listed on the TSX. The TSXV has lower thresholds, such as minimum company size, and lower reporting requirements, compared to the TSX. Companies can “graduate” from the TSXV to the TSX as they grow. The TMX Group provides overviews of the process:
TSXV – The general overview is here - https://www.tsx.com/listings/listing-with-us/listing-guides/tsxv-listing-process
They also provide a simplified “checklist” - https://www.tsx.com/resource/en/42
TSX - https://www.tsx.com/listings/listing-with-us/listing-guides/tsx-listing-process
They also have a guide – albeit extremely high level – on questions to ask prospective agent/sponsors, securities lawyers, and auditors - https://www.tsx.com/resource/en/44
Sponsors
A sponsor is required for Foreign Issuers. Foreign Issuers are defined as: (a) the majority of whose mind and management or whose Control Person, is resident outside of Canada or the United States; or (b) the majority of whose principal operating assets are located outside of Canada or the United States.
Policy 2.2. – Sponsorship and Sponsorship Requirements covers the process - https://www.tsx.com/resource/en/41
Member Firms / Advisors List
An application to list on TSXV must be sponsored by a TSXV member firm. The Toronto Stock Exchange/TSX Venture Exchange/TSX Alpha Exchange state they have over 110 Participating Organizations, Members and Subscribers that advise clients, underwrite new issues, provide corporate finance services, and assist companies interested in becoming publicly traded.
They provide a full list of firms here - https://www.tsx.com/trading/accessing-our-markets/member-firm-directory?l=A
Finding Partners – Recent TSX/TSXV Listings
Underwriters, law firms, and auditors specialize in: 1) certain industries, 2) type of listing, either domestic or foreign, and 3) company sizes (e.g., some focus on micro/small cap, while others on large-cap companies listed on multiple exchanges). Looking at comparable companies that have recently listed and checking who their partners were is a good source of information for finding the right partners that are competent and focused on serving your type of company.
https://www.tsx.com/news/new-company-listings
Listing Requirements
The TSX has listing requirements depending on the type of company. They split companies into the following three buckets:
Industrial, Technology and Research & Development Companies – This is the relevant bucket. Within this bucket there are several different types (e.g., TSX non-exempt technology issuers, TSXV Tier 1 – Industrial Technology and Life Sciences). Your category will depend on the timing of your planned issuance relative to how far you progress in operating history and size. They provide a guide here - https://www.tsx.com/resource/en/125
Other Segments - Mining Companies, and Oil and Gas Companies
Listing costs
TSX provides further detail here - https://www.tsx.com/listings/listing-with-us/listing-guides/listing-costs
Listing Process Timeline
The listing process is highly variable but takes on average three to six months. They provide an example timeline:
Example Transaction – Ballard Power Systems
Ballard Power Systems Inc. recently did a US$550,000,000 issuance. While it was already a public company, it is in a similar industry segment (fuel cells) and the process is similar to an initial listing.
Company Description
The Company engages in the design, development, manufacture, sale, and service of proton exchange membrane fuel cell products. The company offers heavy duty modules, fuel cell stacks, backup power systems, and portable power/ unmanned aerial vehicles (UAV), and material handling products. It also provides technology solutions comprising engineering services and technology transfer services, as well as licenses and sells intellectual property portfolio and fundamental knowledge for various fuel cell applications. The company serves transit bus, automotive, rail, truck, material handling, UAV, marine, and critical infrastructure markets. The company markets its products in China, Germany, the United States, Belgium, the United Kingdom, Japan, Denmark, Canada, Norway, Switzerland, France, Taiwan, the Netherlands, Finland, Spain, and internationally. Ballard Power Systems Inc. was founded in 1979 and is headquartered in Burnaby, Canada.
Underwriters
TD Securities Inc., National Bank Financial Inc. were Co-Lead Underwriters. Other underwriters were BMO Nesbitt Burns Inc., CIBC World Markets Inc., Raymond James Ltd. and Cormark Securities Inc.
Documents
Documents for IPOs are available at https://www.sedar.com. For convenience, we have pulled several documents from the listing that provide a full overview of the process:
· Final Short Form Prospectus – This is an overview of the transaction and due diligence.
· Underwriting Agreement – The overview of the scope of work and what is involved with an underwriter.
· Marketing Term Sheet – High level term sheet; format used by brokers to send to clients.
· Consent Letter of Issuer’s Legal Counsel
· Consent Letter of Auditor
General Guides
· The TSX has put together a Listing Guide on its website - https://www.tsx.com/listings/listing-with-us
Law Firms
Several Canadian Law Firms provide guides/overviews for the process. Some of the more well recognized firms include the following (not provided here, we do not have permission):
Dentons LLP put together a guide for companies (requires sign up). https://insights.dentons.com/464/20094/landing-page/contact-details.asp
Bennet Jones LLP published a guide a few years ago and can be found on Google - Renewables Clean Technology Initial Public Offering Guide
Blakes Cassels & Graydon LLP also published a guide a few years ago and can be found on Google - Going Public in Canada Guide 2013
Recent TSX/TSXV Listings
As noted above, looking at comparable companies that have recently listed and checking who their partners were is a good source of information for finding the right partners that are competent and focused on serving your type of company.