The CSE will permit for listing equity and debt securities with different requirements for each type. The CSE also maintains minimum requirements on share price and distribution which can be found here.
Equity Securities Listing Requirements
A prospective equity securities issuer on the CSE must meet one of the following general requirements:
- an operating company with revenue from the sale of goods or services;
- a non-operating company with financial resources to carry out its business for 12 months following listing, subject to a minimum of $200,000 in working capital at the time of listing, and have advanced to a stage of development; or
- a company that is listed on an exchange in Canada and is not proposing a transaction or change that would be considered a Fundamental Change or Change of Business, provided that the Company has the financial resources to achieve stated objectives for 12 months following listing.
In addition, an issuer will need to meet the requirements applicable to the type of company it is: (i) an operating company; (ii) a non-operating company (such as a resource company with a claim); or (iii) an investment company.
An operating company in any industry must have achieved revenue from the sale of goods or the delivery of services to customers. If the operating company is not yet profitable, it must have liquid assets or a business plan that demonstrates a reasonable likelihood that the company can sustain its operations and achieve its objectives.
A non-operating company in any industry must have a reasonable plan to develop an active business and the financial resources to carry out that plan or if the non-operating company is at an early stage of development must be able to achieve limited objectives. This category of companies is usually for resources based issuers who have a NI 43-101 or a NI 51-101 report. A mineral resource company must have title to a property that is prospective for minerals and on which there has been exploration previously conducted including qualifying expenditures of at least $150,000 by the Issuer or predecessor during the most recent 36 months. The company must get NI 43-101 technical report that recommends further exploration, with a budget for the first phase of at least $250,000. However, an issuer may be approved with qualifying expenditures over the last 36-months when it has spent $75,000 and a Phase 1 budget of $100,000 if they are subject to a more rigorous escrow regime.
An investment company is considered to be a holding company that invests in assets (e.g. real estate) or business. A holding company that is not active in the management of investee companies should own majority interests or have effective control in businesses that can generate returns that will flow to the shareholders through distributions, or have prospects for growth through the reinvestment of earnings.
Investment companies must have minimum net assets of:
- $2 million, at least 50% of which has been allocated to at least 2 specific investments; or
- $4 million.
An investment company must also have a track record of acquiring and divesting interests in arm’s-length enterprises in a manner that can be characterized as conducting an active business.
Management must also have a solid track-record of performance and a clearly defined investment policy disclosed in the Listing Statement.
Debt Securities Listing Requirements
The CSE lists various types of debt instruments including: structure products (such as principal protected notes); government bonds; corporate debentures and crown-corporation debt instruments. The key CSE listing requirements for debt instruments are:
- an issuer (or its underlying entity) must have net assets of at least $1 million;
- for issuers of asset-backed securities, a trustee must be appointed to represent the interests of the holders and the trustee must hold the underlying assets and all money and benefits flowing from the assets;
- for issuers of asset-backed securities that are secured on debt obligations or other receivables from a managed pool of assets, the entity appointed to manage the pool of assets must have adequate experience and expertise and such entity must be required to provide periodic financial reports on the performance and credit quality of the pool, for the benefit of the trustee;
- for issuers asset-backed securities that are secured by equity securities, the equity securities must represent minority interests in, and must not have control of, the underlying entities and must be listed on an exchange; and
- the issuer must appoint and maintain a payment agent acceptable to the Exchange.
The CSE has other requirements relating to the character of any related person to the issuer and any past reputational issues.