TSX Venture Capital Pool Company Program (CPC)
The Capital Pool Company (CPC) program is a unique listing vehicle offered exclusively by TSX Venture Exchange. The program is a two-phased process, involving the following steps:
Phase 1 - The Capital Pool Company
Creating the CPC:
- Three to six individuals with an appropriate combination of business and public company experience put up a minimum of the greater of $100,000 and 5% of total funds raised.
- These founders incorporate a shell company - the Capital Pool Company (CPC) - and issue shares in exchange for seed capital at a minimum price between the greater of $0.05 and 50% of the price at which subsequent shares are to be sold via prospectus.
- The CPC and its advisors prepare a prospectus that outlines management's intention to raise between $200,000 and $4,750,000 by selling CPC shares at typically twice the issuance price of the seed shares, and to use the proceeds to identify and evaluate potential acquisitions.
Selling the shares:
- The CPC files the prospectus with the appropriate securities commission(s), and applies for listing on TSX Venture Exchange.
- The broker sells the CPC shares, pursuant to the prospectus, to at least 200 arm's length shareholders, each of whom buys at least 1,000 shares. No one purchaser can purchase more than 2% of the offering, and no one purchaser together with his, her, or its associates or affiliates can purchase more than 4% of the offering.
- Once the distribution 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.
Phase 2 - The Qualifying Transaction
Announcing the acquisition:
- Within 24 months, the CPC identifies an appropriate business as its "qualifying transaction" and issues a news release to announce that it has entered an agreement in principle to acquire the business.
- The CPC prepares a draft filing statement or information circular providing prospectus-level disclosure on the business that is to be acquired.
- TSX Venture reviews the disclosure document and evaluates the business to ensure it meets minimum listing requirements.
Closing the deal:
- As shareholder approval is typically not required, 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 the following: name change 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 listed company.
For more information on the Capital Pool Company Program: