Although the economy is showing signs of recovery, access to capital is still a work in progress, especially for smaller companies seeking funds. One solution to this problem is the TSX Venture Exchange’s Capital Pool Company (CPC) program, a unique listing vehicle that allows companies to go public with lower capital requirements.
Established in 1987, the program has grown in size, but the concept has essentially remained the same. Qualified candidates are required to meet a minimum of $100,000 of seed capital and then issue shares between the price of $0.05 and 50% of the price at which subsequent shares are to be sold via prospectus. The CPC company can then do a public offering to raise between $200,000 and $2 million to fund a strategic acquisition of private business. After listing the CPC, the company enters the second phase of the program in which it has 24 months to announce the acquisition of a targeted business.
“For the people that created the CPC, it’s an opportunity to have some seed capital and to source businesses, do some due diligence and make an acquisition. Hopefully their investment will do well,” says John McCoach, President of the TSX Venture Exchange, which, along with the Toronto Stock Exchange, is a subsidiary of the TMX Group.
While the concept may sound similar to that of the special purpose acquisition company program, there are some distinct differences between the two. To read the entire article, click here.
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