Going Public In Canada (first) [Guest Post]
Guest Post By: Blaine Mckearney
Sounds like an interesting topic for discussion but first you’ll have to make sure you’re not mixing apples and oranges in comparing the Canadian process with the American process. Do some research and then run the whole thing past a securities lawyer to verify that some (or all) of the statements here are true. If they are, you might want to consider getting listed and trading in Canada first, on your way to an eventual NASDAQ or NYSE listing. Starting as a Canadian pubco might be a cheaper and faster path.
All public companies in Canada are listed and trading on a “Designated Stock Exchange” . They are reporting issuers in good standing with the securities commissions that they report to, just like a NASDAQ or NYSE listing only smaller. It’s important to note that the OTCBB is not a designated stock exchange. Another very important thing is that a “Clean Shell” in Canada has a very different meaning than a clean shell advertised in the USA. A clean shell in Canada is a reporting issuer in good standing with the securities regulators, is up to date with its filings and has a minimum of 150 to 200 public shareholders. It’s ready for an RTO with a target company that meets the minimum listing requirements of the TSX Venture Exchange or the Canadian Securities Exchange. I think that a clean shell in Canada is cheaper to buy than the ones you see advertised in the USA for listing and you get more mileage out of it because of its reporting issuer status.
Something else. Once you’re listed in Canada and have traded for a period (maybe its 4 months), your pubco can apply for listing on the OTCQX as a foreign issuer, which is the highest category of the OTCBB listings. You don’t have to file with the SEC because you already file with the securities commissions in Canada, and there’s more. You don’t have to comply with the Sarbanes – Oxley Act. That’s a huge cost saving. Also, there’s less litigation in Canada and the Canadian dollar is worth only 80 cents today, so everything’s 20% cheaper. Once you’re co-listed on the OTCQX, I’m advised that when you want to up-list to a NASDAQ listing (and qualify), the SEC will allow a “wrap-around” disclosure document which is an approximate saving in time and money of about one third of the costs of an IPO listing.
So, do your homework and get it all checked out by a securities lawyer. You might want to consider getting listed and trading in Canada, first. I’d be happy to answer any questions or steer you to where the answers are. You can email me at firstname.lastname@example.org.
About Blaine Mckearney
Blaine Mckearney resides in Calgary, Alberta, Canada and through his company Loomac Management Ltd. has acted as a facilitator of public company start-ups since 1987. You can read a bit about him in his profile on Linkedin. Also on Linkedin he owns a discussion group called ‘Going Public on the TSX Venture Exchange’.
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