Capital Pool Companies

Going public just got a whole lot easier.  Acadian Securities can show you how with our Capital Pool Company (CPC) Program. 

Atlantic Canada is now on equal footing with the other provinces for the availability of capital. In 2005, the TSX Venture Exchange and the Securities Commissions in Nova Scotia and New Brunswick introduced the Capital Pool Company Program (“CPC Program”). Previously, the CPC program was available only to provinces outside of Atlantic Canada.

What It Is

The CPC Program provides an opportunity for businesses to obtain financing earlier than might otherwise be possible through a normal initial public offering (“IPO”). The CPC Program permits a newly created Capital Pool Company (“CPC”) which has no assets other than cash, and which has not commenced commercial operations, to conduct an IPO and achieve a TSX-V listing. The CPC then uses this pool of funds to evaluate businesses to invest in, which becomes the Qualifying Transaction. The introduction of the Capital Pool Company Program will allow the creation of venture capital pools which can be used to accelerate the growth of private companies.

How It Works

Three to six individuals with public company experience (“Founders”) incorporate the CPC and contribute seed capital between $100,000 and $500,000 in exchange for common shares (“Seed Shares”). The minimum price of the Seed Shares is the greater of $0.05 and 50% of the price at which the common shares will be sold pursuant to the IPO (“IPO Shares”). The CPC and its advisors then prepare a prospectus that outlines management’s intention to raise between $200,000 and $1,900,000 by selling IPO Shares (typically  at twice the issuance price of the Seed Shares), and to use the proceeds to identify and evaluate potential acquisitions. The prospectus and related supporting documentation is filed with the TSX-V, as well as the securities regulatory authorities in all jurisdictions where the IPO Shares are to be sold. A CPC must retain a registrant who also signs the prospectus. Upon completion of the IPO, the CPC must have a minimum of 200 arm’s length shareholders, with each shareholder beneficially owning at least 1,000 common shares and at least 1,000,000 of its issued and outstanding common shares in the public float. No one purchaser can purchase more than 2% of the IPO Shares. The aggregate gross proceeds to treasury from the issuance of the Seed Shares, the IPO Shares and shares issued pursuant to private placements,cannot exceed $2,000,000.

When the IPO is complete, the shares of the CPC will trade on Tier 2 of the TSX-V. Within 24 months following its IPO, the CPC must identify an appropriate asset(s) or business as its Qualifying Transaction.

Once the CPC has entered into an agreement in principle for its Qualifying Transaction, trading in the CPC’s shares will be halted until a press release is issued, a sponsor retained (if required) and the TSX-V staff is satisfied that there are no reasons why the transaction cannot be completed. The CPC must prepare and file an information circular, which is subject to review by regulatory authorities and which must provide prospectus-level disclosure of the Qualifying Transaction. The Qualifying Transaction may also require shareholder approval.

Acadian Securities Can Help You Capitalize on Opportunities Available Through the CPC Program. 

For information on establishing or investing in a Capital Pool Company contact:

Scott Urquhart
Investment Banking | VP Investment Banking
(902) 496 7590 Direct | (800) 565 8660 Office
scott.urquhart@acadiansec.com