Listing Requirements of the Toronto Stock Exchange

The Toronto Stock Exchange is located in the city's bustling business district.

Listing your company is an excellent way to raise capital and expand your operations. However, not all stock exchanges are the right fit for all companies. Older, more well-established exchanges like the New York and Toronto Stock Exchanges have more stringent listing requirements than newer exchanges like NASDAQ, which focus on smaller emerging companies. The Toronto Stock Exchange has very specific requirements for companies.

General Requirements

To become listed and have your shares traded on the Toronto Stock Exchange, a company must first complete a listing application form. The application and its supporting data must demonstrate that the company is able to meet the minimum listing requirements of the exchange.

Next, your company must execute a listing agreement to formally place on record its commitment to comply with exchange requirements during its listing.

Categories of Company

Companies applying for a listing on the exchange are placed in one of three categories: Industrial (General), Mining or Oil and Gas. All special purpose issuers, such as exchange traded funds and limited partnerships, are listed under the Industrial (General) category.

Industrial Companies (Profitable)

To become listed in this category, companies must have net assets of $2 million for profitable companies and $7.5 million for those forecasting profitability soon. They must also have $200,000 in annual operating income, before taxes, in the current or next fiscal year, and $500,000 in before-tax cash flow in the current or next fiscal year. Lastly, needed is current working capital to sustain the business and maintain a financial structure that will support the company's business needs.

Industrial Companies (Technology Startups)

Technology startups have more stringent requirements.

Companies must have at least $10 million in cash, most raised through marketable securities, and enough cash for at least one year of full business operations.

The company must also be able to prove its products or services are market-ready and that the management team is adequately experienced and competent. In this category, the initial stock offering must be valued at more than $50 million.

Industrial Companies (R&D Startups)

The company must have at least $12 million in the treasury, most of which was raised by the company through marketable securities, and enough cash to cover all planned research and development and general costs to cover two years of operations. This type of company must also have a demonstrated two-year track record in research and development activities and proof that the company has "the technical expertise and resources to advance the company's research and development program(s)."

Mining Companies (Producing)

Mining requirements depend on future profitability.

Mining companies with current, productive operations must demonstrate the likelihood of future profitability and at least three years of production at current rates, and either be in production or have made a production decision on the qualifying project or mine. In addition, the company must have enough cash to bring the mine into commercial production and funds for 18 months of full business operations and net assets of $4 million.

Mining Companies (Exploration and Development Stage)

Exploring mining operations must show advanced mineralization "at economically interesting grades" in its mines, as well as a plan for exploration of at least $750,000 that will sufficiently advance the property. In terms of money, it must have enough cash for at least 18 months of full business operations and working capital of at least $2 million with net assets of $3 million.

Oil and Gas Companies

These companies must have proven reserves with a market value of $3 million and a plan to increase reserves, as well as funds for 18 months of full business operations.

Additional Requirements

Unless stated otherwise, a company must be willing to offer at least 1 million freely tradeable shares with a market value of at least $4 million. These shares must be held by at least 300 public holders, each holding one board lot or more. In addition, they are required to have at least two independent directors, chief executive officer (CEO), a chief financial officer who is not also the CEO, and a corporate secretary.

References

• TMX: TSX Listing Requirements

Resources

• The Toronto Stock Exchange