In June 2022, the TSX Venture Exchange (“TSXV” or “Exchange”) launched its Venture Forward initiative, which offers an alternative path for listing non-traditional businesses and adopting innovative transaction structures. Driven by a commitment to modernization and growth, this initiative seeks to address key challenges to accessing capital while leveraging emerging opportunities. It is against this backdrop that the Exchange announced the launch of its “Sandbox” platform (“Sandbox”) on May 13, 2024. Miller Thomson is pleased to have made written and verbal representations to TSXV staff concerning both their Venture Forward initiative and in respect of Sandbox throughout the development of both initiatives.
Sandbox was launched as one of the four key commitments among the TSXV’s broader Venture Forward initiative and strives to provide additional opportunities for new issuers and investors to access Canadian capital markets. As part of Sandbox, the TSXV will now consider unique listing proposals or new listing transaction structures that do not otherwise meet existing TSXV listing requirements. As of May 13, 2024, Sandbox is available to entertain new listing proposals.
Summary
A summary of the pertinent details surrounding Sandbox is highlighted below:
- No prescribed eligibility requirements. Under a Sandbox listing application, issuers do not need to conform to a prescribed list of eligibility criteria. The TSXV will evaluate all applicants on a case-by-case basis, taking into account the specific elements of each applicant’s business.
- Distinction from current listing process. Under the current TSXV listing process, some discretion is available to the TSXV for granting minor waivers on traditional listing requirements. Under a Sandbox listing, the TSXV will have greater flexibility to consider waiving or modifying listing requirements, following their comprehensive and tailored review of an applicant’s business and its listing application.
- Application process. Any issuer who believes that traditional listing requirements of the TSXV, or another exchange, are not suitable based on the issuer’s particular circumstances should contact the TSXV listings team to explore listing opportunities under Sandbox.
- No additional listing fees under Sandbox. Only the TSXV’s standard listing fees will apply to a Sandbox listing application; there are no additional fees specific to a Sandbox application. The standard listing fees can be found in Policy 1.3 of the TSXV Corporate Finance Manual.
- Tailored exit procedure. Upon initial listing, all Sandbox issuers will work closely with the TSXV to establish customized conditions for exiting Sandbox, based on the issuer’s particular circumstances. Generally, issuers are expected to exit Sandbox within 12 months of listing.
- Sandbox is only available for new listings and new listing transactions. Sandbox is not currently available for secondary transactions of currently-listed issuers (i.e. private placements). Rather, Sandbox is meant to facilitate tailored regulatory reviews for new listings and listing transactions (i.e. qualifying transactions and reverse take-overs).
- Special conditions may be levied upon a Sandbox listing. Following discussions between an issuer and the TSXV, certain special conditions may be applied at the TSXV’s discretion to facilitate an issuer’s Sandbox listing. Conditions may include enhanced disclosure requirements for Sandbox issuers, or certain vesting requirements or restrictions on security-based compensation.
Potential Benefits of TSXV Sandbox
- In addition to increased flexibility for listing application reviews, Sandbox, through its provision of a formal and transparent framework for assessing unique listing proposals, has the ability to empower issuers to explore novel business models and transaction structures that may otherwise be overlooked by exchanges. Moreover, Sandbox should serve as a catalyst for increased collaboration amongst the TSXV, issuers and investors. At minimum, Sandbox underlines the TSXV’s willingness to engage in further dialogue and consider listing proposals that do not easily fit within standard listing requirements.
- Through Sandbox, the TSXV is now better equipped to accommodate issuers with unconventional financial structures and unique qualifications, thereby unlocking new opportunities for growth and expansion.
- All Sandbox listings will be considered Tier 2 TSXV issuers and will therefore be subject to all procedures, policies and requirements of a Tier 2 issuer. While Sandbox issuers will not be treated differently than other TSXV issuers with regards to symbol extensions (i.e. Sandbox issuers will not receive a different symbol extension due to being a Sandbox issuer), Sandbox issuers will be required to identify themselves as a Sandbox issuer in all public disclosure documents.
- Sandbox should allow the Exchange to work closely with a wider ambit of issuers to grasp their business intricacies, learn about their distinctiveness, and effectively determine the extent to which discretion can be exercised in the application of TSXV policies.
- The TSXV will consider a traditional listing application under the Sandbox criteria if they observe an issue with a listing application under the traditional process.
Final Thoughts
Sandbox represents an attempt by the TSXV to promote innovation and diversity within Canada’s public venture ecosystem, which has the potential to spur an influx of new opportunities for emerging issuers to access capital.
For further information or assistance with regards to the Sandbox or any other stock exchange listing matters, please contact the Capital Markets and Securities group at Miller Thomson LLP.
