Toronto Stock Exchange Venture

What is Toronto Stock Exchange Venture?

The Toronto Stock Exchange Venture (TSXV), which was initially known as the Canadian Venture Exchange, is a junior trading platform based in Canada.

The TSXV came into being following a merger between Alberta and Vancouver stock exchanges. It presently has operations in Toronto, Montreal and Vancouver and is operated and owned by TMX Group.

The TSXV includes small-cap stocks, and it aims to provide access to capital to venture companies at various stages of growth. According to the TMX Group’s website, 1,649 venture companies listed on the TSXV raised C$ 6.6 billion equity capital in 2020. The TSXV also provides a platform to reach US-based investors who can freely trade in Canadian markets.

What is TSX Venture 50?

TSX Venture 50 is the ranking of the annual top 50 performers on the TSXV platform. In order to make it to this ranking, TSXV-listed firms must accomplish the below-mentioned criteria:

• It should have a market capitalization of C$ 5 million or over
• It must be listed on the TSXV for more than a year
• It should have a closing share price of at least C$ 0.10 as on December 31 of the previous year

Venture companies who meet the criteria as mentioned above are qualified for the Venture 50 ranking based on:

• Changes in share prices of a year
• One-year trading volume
• Change in market capitalization of a year

Examples of few companies that were chosen for TSX Venture 50 in 2020 from each industry are:

• Clean Technology and Life Sciences: Greenlane Renewables Inc and Greenpower Motor Company Inc.
• Diversified Industries: Grande West Transportation Group Inc and Organic Garage Ltd.
• Technology: Loop Insights Inc and Bragg Gaming Group Inc.
• Energy: Reconnaisance Energy Africa Ltd and NG Energy International Corp
• Mining: American Lithium Corp and Cabral Gold Inc.

Frequently Asked Questions (FAQs)

1. What are different tiers on the Toronto Stock Exchange Venture?

A company looking to get listed on TSXV is required to file an application along with supporting documents. These applicant companies are further divided into two tiers (i.e., Tier 1 and Tier 2) based on:

• Historical financial performance: Minimum requirements such as working capital, net tangible assets and financial resources are based on the Tier and company’s industry. Tier 1 companies are required to have one million or more trading shares held by 250 shareholders at the least. A Tier 2 company are required to have at least 0.5 million trading shares held by 200 shareholders minimum.
• Stage of business development: Tier 2 comprises early-stage companies that can later move to Tier 1 by meeting its minimum listing requirements.
• Financial resources: Tier 1 company have more financial resources than Tier 2 companies and have more minimum listing requirements. Tier 2 companies also benefit from reduced compliance obligations post listing.

Detailed minimum listing requirements for Tier 1 and Tier 2 companies can be found on TMX Group’s website is a comprehensive and yearly updated document ‘Guide to Listing’.

2. What is an advanced company?

A public corporation listed on the TSXV and meets the exchange’s Tier 1 minimum listing requirements is known as an advanced company. This company is approved for listing as Tier 1 by the listing committee. The process of approving to Tier 1 includes past conduct of officers, stockholders, and directors and investigation of the reputation.

3. What is graduation from TSXV to TSX?

Graduating is a strategic opportunity when a TSXV-listed company moves to TSX to increase its access to capital, liquidity, and profile. It is a path to more excellent opportunity.

Some of the benefits of graduating to TSX are:

• Increased access to capital for growth
• Increased reputation by meeting the minimum listing requirements of a senior trading exchange
• Enhanced visibility as graduates is covered by an average of five analysts
• Expanded approach to institutional capital
• Better liquidity on the world market
• Better mergers and acquisitions opportunities
• Inclusion in the majority of the indices

Steps to graduation are:

• Schedule an advisory meeting with TSX Listed Issuers Services staff to discuss the eligibility and the listing process.
• Submission of the principal listing document, TSX listing application, and supporting documents.
• TSX listing committee evaluates the listing committee and the supporting documents for approval.
• File the documents needed for final approving listing.

4. What are the positive sides of investing in TSXV-listed stocks?

The TSXV is an exchange providing listed companies access to public capital in their early stages of growth. It attracts companies with an innovative business model whose assets, market capitalization and business are too small to meet the minimum listing requirements in other stock exchanges. Some of the benefits are discussed below:

• Growth equity: Stocks listed on TSXV are high growth companies providing innovative products and services from a range of industries. The top 50 high growth companies can be identified from TSX Venture 50.
• Enhanced Liquidity: These small companies are given a chance to list their shares on a stock, which provides high liquidity to the company.
• Easy regulation process: Though a private company has no obligation to disclose important information about itself, a public company listed on TSXV must disclose required information like other publicly listed companies in other exchanges. But this information is collected for TSXV’s due diligence purpose.