Toronto

MontréalOttawa

CalgaryVancouver

McMillan LLP | Vancouver | Calgary | Toronto | Ottawa | Montréal | Hong Kong | mcmillan.ca

fast facts

• Canada has three stock exchanges: Canada has three stock exchanges: Toronto Stock Exchange (TSX) is the principal exchange

• 40% of the annual trading volume on Canadian exchanges comes from U.S. investors

• Listings can be obtained through an IPO or a merger with a listed company

• Companies trading on a foreign stock exchange benefit from a streamlined dual listing process

• Each exchange has minimum listing requirements

• Listed entities must disclose “material information” when it becomes known

stock exchange listings in Canada Canadian, as well as international companies, can gain access to North American capital markets by having their securities listed on a Canadian stock exchange. Canadian stock exchanges have a particular expertise in minerals and metals which has resulted in significant infrastructure for domestic and international resource based companies to access capital. Companies listed on Canadian stock exchanges also receive the benefit of access to United States capital, one of the largest capital pools in the world. Approximately 40% of the annual trading volume on Canadian exchanges comes from United States investors.

TMX Group Inc. owns and operates the Toronto Stock Exchange (‘‘TSX”) and theTSX Venture Exchange (‘‘TSXV”). The TSX provides senior companies with access toCanadian capital markets. The TSX lists more than 1,500 companies with an aggregatemarket capitalization in excess of $2 trillion. In addition to traditional companies,exchange-traded funds, split share corporations, income trusts, and other investmentfunds may be listed on the TSX. In contrast to the TSX, the TSXV provides junior issuerswith a forum to go public and access to Canadian capital markets. There are more than2,200 issuers listed on the TSXV with an aggregate market capitalization in excess of $31billion.

The Canadian National Stock Exchange (“CNSX”) is an independent Canadian stockexchange that is an alternative to the TSX and TSXV. Most issuers listed on the CNSXhave a small market capitalization. The CNSX generally has less onerous listing,compliance, and filing requirements than the TSX or TSXV.

Aequitas, a new stock exchange that will compete with the TMX Group and the CNSX,was announced in 2013. Certain Canadian chartered banks along with other investorsand brokers are taking a lead role in the creation of this new stock exchange.

we’ve got you covered in Canada

methods of listing The conventional method of obtaining a stock exchange listing in Canada is through an initial public offering of securities, which typically involves the preparation and filing of a prospectus with securities regulators in a Canadian jurisdiction. The prospectus serves as the principal listing document for the purposes of the company’s application for listing.

A company seeking to list its securities on the TSX without undertaking a concurrent prospectus offering may prepare and file an annual information form to serve as its principal listing document together with the required supporting documents and must satisfy the original listing requirements for the applicable category of listing. For companies reporting in the United States, the TSX will accept an annual report using Form 10K or Form 20-F (foreign private issuers) of the U.S. Securities and Exchange Commission as the principal listing document.

A company that is not undertaking a prospectus offering in connection with an application for listing on the TSXV must prepare and file a listing application in prescribed form, together with the required supporting documents, with the TSXV and must satisfy the initial listing requirements for one of the general categories of issuers based on the industry segment of its business.

Companies trading on a foreign stock exchange who meet the listing requirements can directly list on a Canadian exchange and obtain the benefit of a streamlined dual listing process on the TSX and the TSXV.

An alternative method of listing a company on a Canadian stock exchange is through a reverse takeover (also known as a back door listing or reverse merger) of a company already listed on the TSX or TSXV. A reverse takeover transaction can be accomplished in a number of ways, including a statutory amalgamation or court approved arrangement or through the issuance of shares in exchange for other shares or assets of the company seeking the listing. Generally, a transaction that involves the issuance of securities of a listed company that results in existing shareholders owning less than 50% of the securities of the resulting company is treated as a reverse takeover. A reverse takeover transaction requires stock exchange approval as well as approval by the listed company’s securityholders at a duly constituted meeting. The resulting company must also meet the stock exchange’s must satisfy the original listing requirements for the applicable category of listing.

The TSX also offers a special purpose acquisition corporation (SPAC) program and the TSXV offers a similar capital pool company (CPC) program. SPACs and CPCs, which have no assets, other than cash, and have not commenced commercial operations are able to be listed on the TSX or TSXV, as applicable, after completing an initial public offering. Upon listing, the SPAC or CPC uses its pool of cash to identify and review assets or businesses with a view to completing a qualifying transaction to acquire assets or a business. A SPAC must complete a qualifying transaction within 36 months of its initial public offering, and a CPC must complete a qualifying transaction within 24 months of its initial listing.

Copyright © 2013 McMillan LLP

minimum listing requirementsApplicants for listing on the TSX must meet the minimum listing requirements for one of three general categories of issuers. The three general categories are Industrial, Mining, and Oil & Gas issuers. The minimum listing requirements consist of certain industry specific requirements applicable to each particular issuer category as well as general requirements applicable across all categories of issuers. In particular, minimum listing requirements relating to the public distribution of the issuer’s securities, the man-agement of the issuer and sponsorship of the issuer apply to all applicants.

Applicants for listing on the TSXV must meet the initial listing requirements for one of four general categories of issuers based on the industry segment of its business. The four general categories are: (i) Mining; (ii) Oil & Gas; (iii) Industrial, Technology, or Life Sciences; and (iv) Real Estate or Investment issuers. The initial listing requirements are divided into particular tier and industry segments and consist of quantitative, distribu-tion, management, and sponsorship requirements.

Financial requirements are derived from the company’s financial statements and can include metrics such as asset value, earnings and working capital. Distribution require-ments set a minimum number of tradable shares and shareholders. There are other listing criteria that may be unique to the company’s industry segment including the experience of the management and viability of its strategy.

Sponsorship by a participating organization may be required for new applicants in determining their suitability for listing on the TSX or TSXV. However, if the company is profitable or completes a concurrent financing with Canadian brokers or sufficient due diligence completed on the company on another stock market, the sponsorship requirement may be waived.

continuous disclosure requirementsAfter completing an IPO or a reverse takeover transaction with a listed company, the resulting company becomes a “reporting issuer” for Canadian securities law purposes and is required to comply with periodic reporting and filing requirements. These include the public filing of annual and interim financial statements, annual reports, proxy circulars, material change reports and other reporting requirements.

If a company qualifies as a “designated foreign issuer” by virtue of it being subject to foreign disclosure requirements and the total number of its equity securities owned by residents of Canada does not exceed 10 percent, it will be exempt from the majority of Canadian periodic reporting and filing requirements. Designated foreign issuers are exempt from a number of Canadian securities legislation requirements on the condi-tion that they comply with the requirements of their home jurisdictions, including news releases, material change reporting, financial statements, annual information forms, proxy solicitation, early warning and insider reporting.

For U.S. companies seeking a listing on a Canadian stock exchange, the U.S./Canadian Multijurisdictional Disclosure System, established by U.S. and Canadian securities regulators, permits a U.S. issuer to utilize its U.S. filings to satisfy its Canadian disclosure obligations.

Copyright © 2013 McMillan LLP

In addition to the continuous disclosure requirements under applicable Canadian securities laws, Canadian stock exchanges have separate and distinct disclosure require-ments for their listed companies. Companies listed on Canadian stock exchanges must immediately disclose all material information about their business and affairs as soon as management becomes aware of the information or as soon as they recognize that information, which was previously known to them, is material. Under applicable stock exchange policies, material information is any information relating to the business and affairs of the company that results in, or would reasonably be expected to result in, a significant change in the market price or value of any of the company’s securities.Companies listed on Canadian stock exchanges must disclose “material information” which is broader than the definition of a “material change”, which is required to be dis-closed under applicable securities law. The requirement to disclose material information encompasses disclosure of material facts that may not entail a material change resulting in listed companies disclosing a broader range of information than may be required under applicable securities law.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained. For more information contact your regular McMillan advisor or go to http://www.mcmillan.ca.

Copyright © 2013 McMillan LLP