Going public in Canada can be a complicating and difficult task to navigate if you don’t have the correct assistance or plan. Here we identify the key things to think about and implement when deciding to go public on the TSX-V and CSE.
Strategic Business Plan
A well-constructed and detailed business plan is the most useful tool to utilize for a company looking to go public. The business plan will form the basis for disclosure in the prospectus and will assist in marketing and preparing for roadshows in addition to stock exchange approval. Your business plan will be reviewed by underwriters, institutions, and potential investors; therefore, it is crucial to take the time to define your business and its strategic alignment as it will be instrumental during your IPO.
Your company’s capital structure should be consistent with that of a typical public company. Any unusual share attributes, shareholder rights or agreements should be reviewed and may need to be amended prior to going public. Public companies in Canada have the ability to issue an unlimited number of common shares and may often have the right to issue preferred shares in series, with the series rights to be established by the directors in the future. It is not unusual for Canadian listed companies to have multiple share classes and types of securities outstanding.
Corporate governance processes applicable for a public company will need to be adopted and disclosed annually. Board composition, committees and mandates should be reviewed to ensure proper representation of independent directors and compliance with corporate governance requirements. A TSX listed company is required to have an audit committee composed of at least 3 directors, all of whom are independent and financially knowledgeable. Issuers listed on the TSX-V, CSE or NEO have more flexibility regarding the composition of the board.
Details of the compensation to be paid to executive officers of the company, as well as the terms of any employment agreements, will be disclosed in the prospectus. It’s important to review your employment, incentive and compensation practices to make sure they’re appropriate for a public company. If the company already has an equity-based incentive plan in place, these plans must be amended prior to the IPO to ensure that they comply with the applicable exchange requirements.
Information and Reporting Systems
Once your company becomes a reporting issuer under securities legislation in at least one Canadian jurisdiction, it is required to provide continuous disclosure duties going forward. The CEO and CFO will be required to verify on an annual and quarterly basis that the company has appropriate disclosure controls and procedures and internal controls over financial reporting. The organizational systems required to support such certificates should be in place prior to the IPO.
Canada has adopted International Financial Reporting Standards for all public companies. A company listed on the TSX must file annual audited financial statements within 90 days of the end of its financial year. Companies listed on junior exchanges such as the TSX-V and CSE have 120 days to file their annual audited financial statements. Foreign companies may be eligible to report in accordance with generally acceptable accounting principles of the United States or certain other foreign jurisdictions.
If any clarification is required in regard to the steps needed to go public in Canada, we would love to assist you with the answers. Our expert team here at Gopublic.ai carry a wealth of knowledge regarding the process of getting you ready for your go public transaction. Please feel free to reach out to us with any uncertainty you may have.