“… and we are going to list our securities on the TSX…” – Listing Representations and Offering Memoranda – Canadian Issuers

By Alixe Cormick and Brian Koscak

dreamstime_s_8356104Securities laws in Canada prohibit making a written or oral representation that a security will be listed on a stock exchange or quoted on a quotation and trade reporting system (an Exchange) or that an application has been or will be made to list the security, unless an issuer meets certain conditions or obtains permission or authorization from all applicable securities regulators in Canada.  This would occur when an issuer states in its offering document, for example, that “we will be applying to have our shares listed on the Toronto Stock Exchange“. This article discusses listing representations in offering documents of Canadian issuers.

Canadian (and foreign issuers) in the process of listing or obtaining a quote for their securities on an Exchange believe a listing representation is important to potential investors since it potentially provides for the liquidity of the issuers’ securities in a public marketplace.  Although many investors often prefer that an issuer’s securities are listed or quoted on an Exchange, an issuer  cannot include a listing representation in its offering memorandum or offering presentation without complying with applicable Canadian securities laws. Below is a brief overview of the  listing representation requirements in Canada.

Ontario. Subsection 38(3) of the Ontario Securities Act allows issuers to make a listing representation if the issuer meets the following conditions:

  • the issuer has applied to list or quote the securities being offered and other securities of the issuer are already listed on an exchange or quoted on a quotation and trade reporting system, or
  • the issuer has received written approval, conditional or otherwise, to the listing or quote of the securities being offered on an exchange and the exchange has indicated it has consented to, or indicated that it does not object to the representation.

British Columbia. In British Columbia subsection 50(1)(c) of the British Columbia Securities Act combined with BC Notice 47-701 Blanket Permission Under Section 50(1)(c) of the Securities Act allow issuers to make a listing representation in their offering memorandum and offering presentations provided the representation is factually correct.

Other Provinces and Territories. Issuers must file an exemption application for authorization in Quebec, and permission in all other Canadian provinces and territories other than Ontario or British Columbia (assuming an issuer complies with the applicable requirements in these jurisdictions), before make a listing representation in their offering memorandum or offering presentations. Issuers may file this exemption application in multiple jurisdictions simultaneously using National Policy 11-203 Process for Relief Application to Multiple Jurisdictions. The applicable Canadian securities regulators will require issuers to show they meet the conditions set-out in subsection 38(3) of the Ontario Securities Act before providing their permission or authorization.

Issuers should consider whether the added cost, complexity and time delay associated with listing securities on an Exchange and obtaining permission or authorization to make a listing representation truly adds to their offering.

Below are the statutory references to the prohibition against listing representations under Canadian securities law.

Prohibition Against Listing Representation
Canadian Statutory Provisions

Jurisdiction Statutory Provision
British Columbia* s. 50(1)(c) of the Securities Act (British Columbia)
Alberta s. 92(3)(b) of the Securities Act (Alberta)
Saskatchewan s. 44(3) of the Securities Act (Saskatchewan)
Manitoba s. 69(3) of the Securities Act (Manitoba)
Ontario s. 38(3) of the Securities Act (Ontario)
Québec s. 199(4) of the Securities Act (Québec)
Nova Scotia s. 44(3) of the Securities Act (Nova Scotia)
New Brunswick s. 58(3)(c) of the Securities Act (New Brunswick)
Prince Edward Island s. 147(1)(c) of the Securities Act (Prince Edward Island)
Newfoundland and Labrador s. 39(3) of the Securities Act (Newfoundland and Labrador)
Northwest Territories s. 147(1) of the Securities Act (Northwest Territories)
Nunavut s. 39(3) of the Securities Act (Nunavut)
Yukon s. 147(1) of the Securities Act (Yukon)

* British Columbia Exemption: 47-701 Blanket Permission Under Section 50(1)(c) of the Securities Act [BCN]

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Disclaimer

This blog is not intended to create, and does not create an attorney-client relationship. You should not act or rely on information on this blog post without first seeking the advice of a lawyer.  This material is intended for general information purposes only and does not constitute legal advice.  For legal issues that arise, the reader should consult legal counsel.  See also Disclaimer at the top of this page .

Co-author –  Alixe Cormick is the founder of Venture Law Corporation located in Vancouver, British Columbia and a member of the Advisory Board of the National Crowdfunding Association of Canada. You can reach Alixe by phone at 604-659-9188, by e-mail at acormick@venturelawcorp.com, on twitter @AlixeCormick or on Google+.

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