If you’re a private company that operates outside of Canada, you may have a few questions that we hope to address in this article. We aim to help you better understand whether or not you can list in Canada, why you would want to, and your options as to how you can go-public on a Canadian stock exchange.
A foreign company does not need to be incorporated in Canada or have Canadian operations or management to list on the TSX or the TSX-V. Nonetheless, the exchanges will normally require that some members of the company’s board of directors have North American public company experience.
The same goes for the CSE, as a company does not need to be incorporated in Canada to go public. It is known that many U.S. domestic corporations have gone public in Canada and are listed on the CSE. However, U.S. companies may look to contemplate reincorporation, or a change in the jurisdiction of incorporation, into a foreign jurisdiction such as Canada, prior to going public on the CSE.
It is important to note that international companies already listed on other exchanges do not have to meet specific CSE listing requirements, but must exhibit that they are able to satisfy public reporting commitments in Canada. The same goes for listing on the TSX-V, but the exchange may enforce additional requirements in which the foreign company must satisfy in order to list.
Why List Securities In Canada?
When listing your company’s securities on a Canadian stock exchange, significant pools of capital and investors become available both domestically and abroad.
The Toronto Stock Exchange Venture (TSX-V) and the Canadian Securities Exchange (CSE) are both set up for smaller growth companies with market capitalizations of around $2M-$250M. However, unlike some of the US exchanges such as the “pink sheets”, the Canadian exchanges are fully regulated.
Aside from these advantages, Canada has less demanding corporate governance requirements than that of the United States under Sarbanes-Oxley. Going public in Canada is not radically different than going public in the United States, but Canada does have advantages to gain from the corporate governance and regulatory perspectives.
How Is the Offering Done?
The most common way of offering securities to the public in Canada is to supply securities under a prospectus in one or more Canadian jurisdictions and to list those securities on one of the Canadian stock exchanges. As noted from previous article posts, undertaking an initial public offering (IPO) in Canada is not the exclusive way to take your company public.
Aside from an IPO, the other ways to take your company public in Canada include a direct listing, an RTO transaction and a qualifying acquisition with a CPC, which is essentially a small SPAC. Your company could also go public in Canada through a transaction known as a “qualifying transaction” with a capital pool company listed on the TSX-V. In a separate blog post, we discuss 5 Ways to Go Public in Canada in greater detail, offering more clarity in regard to the IPO alternatives.
Please feel free if you have any questions or queries on any of the topics discussed here to contact our team who will help you find the best route for your company.