Listing on the Canadian Securities Exchange (CSE)

Different types of companies have varying requirements for listing debt securities and equity under current CSE regulations. Full compliance with the corresponding requirements is vital to ensuring CSE listing.

The IPO process encompasses roughly 3 months, or 12 weeks, from the first stages of preparation through the closing of the IPO and first day of trading. Your underwriter will help ensure that this process goes as smoothly as possible through an underwriting agreement that outlines all stock issued and the price of said stock.

Securing an Equity Securities Listing

In order to be listed on the CSE, an equity securities issuer must be in full compliance with one item in each of the following two groups:

CSE Requirements

• Currently exists as an operating company with proven sales of goods and/or services.
• Currently classified as a non-operating company, but with ample financial capital to ensure 12 months of business following a listing on the CSE. This capital must total at least $200,000, and the company has had to make progress toward its business goals.
• Currently listed on another Canadian exchange and is seeking CSE listing without a Fundamental Change in Business. The company will also need to have ample financial capital to ensure 12 months of business following a listing on the CSE.

Company Requirements

• Exists as an operating company
• Exists as a non-operating company
• Exists as an investment company

Operating Company

To be classified as an operating company, the business must have a track record of selling goods and/or delivering services to a customer base. Profitability does not necessarily define an operating company, though the company must have either a detailed business plan or adequate liquid assets to support the company’s range of objectives.

Non-Operating Company

Establishing a non-operating company can be done at the earliest development stage as long as the company is able to meet defined goals, regardless of their size. Or, a company can possess both a detailed business plan and financial backing that will allow the plan to come to fruition. In order to meet the criteria of non-operating company, the company typically must have a NI 43-101 or a NI 51-101 report. For example, if the company is involved in oil drilling, the company must prove that it has the resources to carry out the drilling and meet the requirements of the corresponding report.

Investment Company

A holding company that has active investments in assets and/or businesses meets the requirements of being labeled an investment company. Additionally, the company must be able to demonstrate a history of active business through acquisitions and divestments, as well as possess an accurate and detailed investment policy. 

If the company is not currently managing any businesses, it can still meet the classification by satisfying one of the following:

• Owns a majority stake or is in control of a business that generates shareholder returns.
• Has developed a plan to utilize earnings for continued growth.

Furthermore, an investment company must also have $4 million in net assets or $2 million in which at least half has been utilized for two separate investments.

Securing a Debt Securities Listing

From government bonds to corporate debentures, the CSE currently lists a diverse selection of debt instruments. In order to list these debt instruments, or ones related to structure products and crown-corporations, all of the following requirements must be met:

• Net assets totaling at least $1 million must be possessed by the issuer.
• A payment agent verified by the CSE must be both appointed and preserved by the issuer.

The following must also be met for asset-backed securities:

• A trustee must be appointed in order to ensure that holders' interests are being actively respected. Additionally, this trustee is required to hold underlying assets, as well as money and benefits from said assets.
• Companies with asset-backed securities secured from managed assets or debt obligations must appoint an organization that has a track record of experience. Furthermore, the organization is required to release regular financial reports for trustees outlining the performance of the assets.
• Equity securities securing asset-backed securities must be listed on an exchange and are not permitted to be in control of the entities. This is to ensure that minority interests are being properly represented.