Proposed Changes to TSX Rules Governing Special Purpose Acquisition Corporations [Completed]
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Effective date: |
The amendments are effective on October 4, 2018 |
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Last updated: |
October 2018 |
Overview
On May 31, 2018, the Toronto Stock Exchange (TSX) released proposed amendments to Part X — Special Purpose Acquisition Corporations of the TSX Company Manual (the Manual). Notable changes include codifying exemptions previously provided to SPACs and removing the requirement for shareholder approval of a qualifying acquisition subject to certain requirements. Subsequently, on October 4, 2018, the TSX has issued a Notice of Approval advising that it is implementing these amendments.
The Special Purpose Acquisition Corporation ("SPAC") program offers an alternative listing process for companies on TSX. A SPAC is a unique investment vehicle that allows the public to invest in companies or industry sectors normally sought by private equity firms.
Unlike a traditional initial public offering ("IPO"), the SPAC program enables seasoned directors and officers to form a corporation that contains no commercial operations or assets other than cash. The SPAC is then listed on TSX via an IPO, raising a minimum of $30 million. At least 90% of the funds raised are placed in escrow. Within 36 months of listing, the SPAC must acquire an operating company or assets (being the qualifying acquisition). Public securityholders of the SPAC are provided with a right to redeem their shares for their pro rata allocation of the escrowed funds at the time of the qualifying acquisition. If the qualifying acquisition has not been completed by the SPAC within the 36 month period, the SPAC must provide for a liquidation distribution of the escrowed funds to the public securityholders, and the SPAC would be delisted from TSX.
SPACs become reporting issuers as a result of their IPO, and thus are fully regulated by the relevant provincial securities commissions, as well as TSX. Because the SPAC is a publicly traded entity, it also provides access to liquidity for investors, allowing those shareholders to increase or decrease their investment risk profile accordingly.
In a summary prepared by Blakes, the proposed amendments codify certain market practices and exemptions previously granted by the TSX and remove the requirement for shareholder approval of a qualifying acquisition subject to certain requirements. The proposed amendments also include certain non-material amendments to clarify various provisions as well as ancillary changes.
Recent activities
October 2018
On October 4, 2018, the TSX issued a Notice of Approval advising that it is implementing these amendments.
May 2018
On May 31, 2018, the TSX released proposed amendments to Part X — Special Purpose Acquisition Corporations of the TSX Company Manual. Comments are requested by July 3, 2018.
