Introduction

This Guide provides private companies an overview of the process for obtaining a public listing in Canada and highlights key considerations for the company and its principal stakeholders both prior to and throughout the going public process.

Part 1 outlines various matters that a private company should consider before deciding to go public, and provides a summary of the principal methods of completing a public listing in Canada.

Part 2 describes the regulatory framework in Canada for public companies and how that framework affects a listing and the post-listing reporting requirements.

Part 3 provides an overview of the principal listing methods in Canada, being an initial public offering, a reverse takeover or a qualifying transaction.

Part 4 details the listing procedures for the Toronto Stock Exchange and the TSX Venture Exchange, the two principal listing markets in Canada.

Part 5 outlines what a company is required to include in a prospectus or other listing document and the associated liability with the disclosure provided in such documents.

Part 6 provides an overview of a dealer's (i.e., an underwriter's) involvement in a going public transaction and a summary of what a company should expect for an offering of securities completed concurrently with a going public transaction.

Part 7 outlines certain Canadian tax considerations for a company looking to complete a going public transaction in Canada.

Part 8 provides a summary of the Canadian reporting requirements for a company following a public listing on a Canadian exchange.

The decision to go public is one of the most important decisions in a company's development. Fasken has significant experience in guiding market participants in connection with conventional and alternative going public transactions in both the Canadian and cross border contexts. Should you have any related issues or questions about the going public process, please contact any of the authors of this guide (see page 44) or your regular Fasken lawyer.

Part 1 Key Considerations Before Going Public and Overview of Listing Methods

A. Advantages and Disadvantages of Public Listing

Before deciding to pursue a going public transaction, a company should consider the following advantages and disadvantages of a public listing in Canada:

Advantages  Disadvantages
  • Increased access to capital (both on initial listing and subsequent financings) can assist a company in pursuing a number of possible business objectives.
  • Enhanced liquidity for existing shareholders.
  • Established value for company's securities.
  • Greater flexibility with ability to offer shares as executive compensation and/or acquisition consideration.
  • Enhanced visibility and corporate image.
  • Lower cost of capital compared to debt financing or capital raising as a private company.
  • Degree of initial and ongoing public company costs.
  • Loss of control, exposing the company to risk of a takeover bid or shareholder activism.
  • Continuous disclosure obligations.
  • Some loss of confidentiality, e.g., executive compensation.
  • Increased exposure to shareholder scrutiny and exposure to liability under securities laws.
  • Need for enhanced management resources.
  • Escrow requirements and resale restrictions.


B. Methods of Going Public

Stock Exchanges

In Canada, there are presently four main recognized stock exchanges for corporate entities:

Exchange Operated by
Toronto Stock Exchange (TSX) TMX Group Inc.
TSX Venture Exchange (TSXV) TMX Group Inc.
Canadian Securities Exchange (CSE) CNSX Markets Inc.
Cboe Canada Cboe Global Markets

The TSX and TSXV are the two most established exchanges in Canada on which most Canadian public companies are listed.

While the TSX and TSXV provide the greatest visibility and liquidity for public companies in Canada, a company may choose to list on the CSE or Cboe Canada1 for a number of reasons, including listing eligibility, industry-related regulations, cost and timing.

Since the TSX and TSXV remain the two principal listing markets in Canada, the focus of this Guide is in respect of a listing on those exchanges.

Principal Listing Methods

There are three primary methods of going public on the TSX or TSXV — an initial public offering (IPO), a reverse take-over (RTO) of an existing TSX or TSXV listed company, or a qualifying transaction (QT) with a capital pool company (CPC) listed on the TSXV. 2

The table below sets out the main advantages, disadvantages and key considerations to assess when choosing a listing method. We explore each of the listing methods in more detail in Part 3 of this Guide.

Footnotes

1. Cboe Canada is a privately owned exchange formerly known as the NEO Exchange.

2. Note that IPOs relating to SPACs (Special Purpose Acquisition Corporations) are not addressed in this guide.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.