| 2800+ |
|---|
|
CPCs Created |
| 85%* |
|---|
|
of CPC Completed QTs |
| $78B+ |
|---|
|
equity raised by former CPCs |
| 35% |
|---|
| of currently listed TSX Venture Exchange grads are former CPCs |
*Since inception
The Capital Pool Company (CPC) Program is a unique Canadian invention that supports earlier stage private companies to complete a go public transaction. A Qualifying Transaction is effectively a reverse takeover of a CPC by an operating business that will access the capital, shareholders and expertise of the CPC to complete a listing on the TSX Venture Exchange or Toronto Stock Exchange.
It is the most common way that companies go public on TSX Venture Exchange and the program has an incredible track record as an ingredient in the success of many companies that have grown to be leaders in the Canadian markets.
Step 1 | CPC Initial Public Offering
The CPC program introduces investors with financial market experience to entrepreneurs whose growth and development-stage companies require capital and public company management expertise. Unlike a traditional IPO, the CPC program enables seasoned directors and officers to form a Capital Pool Company with no assets other than cash and no commercial operations, list it on TSX Venture Exchange, and raise a pool of capital.
Step 2 | Qualifying Transaction
The CPC then uses these funds to seek out an investment opportunity in a growing business. Once the CPC has completed its qualifying transaction and acquired an operating company that meets Exchange listing requirements, its shares continue trading as a regular listing on TSX Venture Exchange.
HOW THE CPC PROCESS WORKS
- Formation of CPC board and management team
- CPC Seed Capital Requirement
- IPO Requirements
- The IPO Process
- Listing of the CPC on TSX Venture Exchange
- Identify and Evaluate Potential Targets and Negotiate QT
- Qualifying Transaction Agreement with Target and Announcement of QT
- TSX Venture Exchange Conditional Acceptance for the QT
- Filling of Final Disclosure Document Publicly
- Closing the Qualifying Transaction
- Listing of New Public Company
CREATING THE CPC
FORMATION OF CPC BOARD AND MANAGEMENT TEAM
CPC Board and Management (“CPC Founders”) is made up of at least three individuals with an appropriate combination of business and public company experience, specificallly:
- A positive track record with junior companies, as evidenced by growth of such companies;
- The ability to raise financing;
- A positive corporate governance and regulatory history;
- Technical experience in the appropriate industry sector, where applicable;
- The ability to locate and develop appropriate acquisition opportunities for companies; and
- Positive experience as directors or senior officers with public companies in Canada or the United States, as evidenced by the growth of such companies and /or the listing of such companies on Tier 1 of the Exchange or on a senior exchange or quotation system such as the TSX, NASDAQ or NYSE.
CREATING THE CPC
CPC SEED CAPITAL REQUIREMENT
- Minimum seed share price greater of $0.05 and 50% of the IPO price
- Minimum of $100,000, maximum of $1,000,000
- Minimum amount from Directors/Officers of the greater of (i) $100,000; or (ii) 5% of all proceeds
- Minimum $5,000 from each Director/Officer
CREATING THE CPC
IPO REQUIREMENTS
| IPO |
|---|
Minimum$0.10/ shareMinimum of$200,000Maximum of$9,500,000 |
| AGGREGATE GROSS PROCEEDS |
|---|
Maximum of$10,000,000 |
| DISTRIBUTION |
|---|
Minimum of150 Public Shareholderseach holding at least 1,000 shares 500,000free-trading shares20% public shareholders |
| OTHER CRITERIA |
|---|
| No agreement in Principle* with a private company |
* AS DEFINED IN TSX VENTURE EXCHANGE POLICY 2.4 - CAPITAL POOL COMPANIES
SELLING THE SHARES
THE IPO PROCESS
The CPC files the preliminary prospectus with the appropriate securities commission(s), and applies for listing on TSX Venture Exchange.
- The TSX Venture Exchange and/or the regulatory authorities review the prospectus and inform your professional advisors of any deficiencies.
- After all deficiencies are cleared to the satisfaction of the regulators, file a final prospectus.
- The securities commission will issue a final receipt as acceptance of the prospectus.
- This approval allows your company to begin selling shares in the provincial jurisdictions where a final receipt has been issued.
- The broker sells the CPC shares, pursuant to the prospectus, to meet the public distribuition requirements
- Once the IPO has been completed and closed, the CPC is listed for trading on TSX Venture Exchange. The symbol includes a .P to identify the company as a CPC.
SELLING THE SHARES
LISTING OF THE CPC ON THE TSX VENTURE EXCHANGE
THE QUALIFYING TRANSACTION
IDENTIFY AND EVALUATE POTENTIAL TARGETS & NEGOTIATE A QT
- Protection of public capital
- Preservation of working capital
- Clean capital structure
- CPC Founders’ economic interests are aligned with shareholders
Once the CPC identifies an appropriate business as its Qualifying Transaction, it issues a news release to announce that it has entered into a Qualifying Transaction Agreement to acquire the business.
THE QUALIFYING TRANSACTION
QUALIFYING TRANSACTION AGREEMENT WITH TARGET AND ANNOUNCEMENT OF QT
- The CPC prepares a draft filing statement or information circular providing prospectus-level disclosure on the business that is to be acquired, and files with the Exchange, together with all supporting documents.
- TSX Venture Exchange reviews the disclosure document and evaluates the business, structure, and people to ensure that the Resulting Issuer will meet the Exchange’s initial listing requirements.
THE QUALIFYING TRANSACTION
TSX VENTURE EXCHANGE CONDITIONAL ACCEPTANCE FOR THE QT
THE QUALIFYING TRANSACTION
FILING OF FINAL DISCLOSURE DOCUMENT PUBLICLY
CLOSING THE DEAL
CLOSING THE QUALIFYING TRANSACTION
As shareholder approval is typically not required for an arm’s length qualifying transaction, the filing statement is posted on SEDAR for at least seven business days, after which the qualifying transaction closes and the business is acquired.
- Additional components of the deal often include a name change, share consolidation, and private placement coinciding with the closing of the qualifying transaction.
- The .P from the ticker symbol is removed and the company now trades as a regular TSX Venture Exchange listed company.
CLOSING THE DEAL
LISTING OF NEW PUBLIC COMPANY
National Webcast Slides
Access the slides from the CPC information sessions here.
GET MORE INFORMATION
CPC CAPITAL STRUCTURE
| COMMON SHARES | NUMBER OF SHARES | PRICE PER SHARE |
|---|
| CPC Seed Shares (CPC Founder’s shares) | 2,000,000 | $0.05 |
| CPC IPO Shares | 4,000,000 | $0.10 |
| |
||
TOTAL ISSUED AND OUTSTANDING CPC SHARES |
6,000,000 |
PRIVATE COMPANY CAPITAL STRUCTURE
| COMMON SHARES | NUMBER OF SHARES | PRICE PER SHARE |
|---|
| Management Founder Shares | 6,000,000 | $0.00 |
| Initial Seed Capital from Friends and Families | 8,000,000 | $0.05 |
| Seed Capital Round No.2 | 10,000,000 | $0.10 |
| Seed Capital Round No.3 | 12,000,000 | $0.30 |
| |
||
TOTAL ISSUED AND OUTSTANDING SHARES |
36,000,000 |
THE COMPANY RESULTING FROM COMBINING THE CPC AND THE PRIVATE COMPANY
| MARKET PRICE OF CPC SHARES BEFORE THE ANNOUNCEMENT OF QT ASSUMED TO BE $0.15 (PRE-CONSOLIDATION) | SHARES | PRICE |
|---|
| CPC Issued and Outstanding Shares | 6,000,000 | $0.15 |
| Consolidation 3 for 1 | -4,000,000 | |
| CPC Shares Total (Post-Consolidation) | 2,000,000 | $0.45 |
| Shares issued for acquisition of Private Company | 36,000,000 | |
| Concurrent Private Placement | 10,000,000 | $0.55 |
| |
||
TOTAL NUMBER OF SHARES ISSUED IN QT |
46,000,000 |
TOTAL ISSUED AND OUTSTANDING SHARES OF RESULTING ISSUER |
48,000,000 |
CPCs currently listed on the TSX Venture Exchange
Available CPCs are those that have not announced a QT.
