TORONTO STOCK EXCHANGE 6 Note that the calculation is limited to listed equity securities. As a result, non-equity securities such as preferred shares or warrants will not be included in the calculation. Unlisted securities such as multiple voting shares, Class B shares (where both Class A and Class B shares are identical in attributes, but Class A is listed and Class B is not listed), or other unlisted securities that may be convertible into, and/or are the economic equivalent of, the listed equity security, will not be included in the calculation. The rationale behind this exclusion is that in the context of the original listing requirements, market capitalization serves as an indicator of market support for the applicant’s listed equity rather than enterprise valuation. Example - IPO with Dual-Class Share Structure The applicant is completing an IPO of 25,000,000 subordinate voting shares at $10 per share. The applicant will also be issuing to its founders 1,000,000 multiple voting shares, each multiple voting share carries 10 votes and is convertible into a subordinate voting share. Only the subordinate voting shares will be listed on TSX. • For IPOs, market capitalization = the offering price x total number of outstanding equity securities being listed. • Market capitalization = $10 x 25,000,000 = $250,000,000. • Multiple voting shares are not included in the calculation because they are not being listed. Example - Direct Listing with Dual-Class Share Structure The applicant is currently listed on another stock exchange and has outstanding, as at the date of TSX conditional listing approval, 35,000,000 subordinate voting shares with a 20-day average closing price of $11.50 per share and 17,500,000 multiple voting shares with a 20-day average closing price of $12.00 per share. The multiple voting shares are participating. Both classes of shares will be listed on TSX. • For direct listings from other stock exchanges, market capitalization = the 20-day average closing price of the equity securities on such exchange x total number of equity securities outstanding on the date of TSX conditional listing approval. • Market capitalization = ($11.50 x 35,000,000) + ($12.00 x 17,500,000) = $612,500,000. • Multiple voting shares are included because they are listed equity securities. Example - Direct Listing with Listed Preferred Shares The applicant is currently listed on another stock exchange and has outstanding, as at the date of TSX conditional listing approval, 50,000,000 common shares with a 20-day average closing price of $10.00 and 5,000,000 preferred shares with a 20-day average closing price of $35.00 per share. The applicant has applied to list both the common shares and the preferred shares on TSX. Following TSX conditional listing approval, the common share price increases to a 20-day average closing price of $11.00 and options are exercised for 1,500,000 common shares. • For direct listings from other stock exchanges, market capitalization = the 20-day average closing price of the equity securities on such exchange x total number of equity securities outstanding on the date of TSX conditional listing approval. • Market capitalization = $10.00 x 50,000,000 = $500,000,000. • Although they are being listed on TSX, the market value of the preferred shares is not included. • Although 1,500,000 options are exercised, and therefore the number of equity shares outstanding has increased to 51,500,000, TSX still uses the number of equity shares outstanding as at the date of TSX conditional listing approval. Similarly, even though the 20-day average closing price has increased to $11.00, TSX still uses the 20-day average closing price as at the date of TSX conditional listing approval.
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