Capital Pool Company (CPC) Program

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The CPC program is a unique listing vehicle offered exclusively by TSX Venture Exchange. The program is a two-phased process involving the following steps:​

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Phase 1 - The Capital Pool Company​​

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Creating the CPC:

• Minimum three individuals with an appropriate combination of business and public company experience put up a minimum of the greater of $100,000 or 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 or 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.

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Selling the shares:​

• The CPC files the prospectus with the appropriate securities commission(s), and applies for listing on TSXV.

• 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 an amended prospectus in final form.

• 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 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 in the secondary market. The symbol includes a .P to identify the company as a CPC.

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Phase 2 - The Qualifying Transaction​​

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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.

• TSXV reviews the disclosure document and evaluates the business to ensure it meets minimum listing requirements.

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Closing the deal:

• Where shareholder approval is required for a non-arm's length qualifying transaction, an information circular is posted on SEDAR and sent to the CPC's shareholders prior to holding a shareholders' meeting to obtain majority of the minority approval of the proposed qualifying transaction.

• Where shareholder approval is 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 change of name and a 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.