Proposed TSX Rules For SPACs

Following an emerging trend in the United States, the Toronto Stock Exchange has published for comment proposed amendments to the TSX Company Manual that would allow special purpose acquisition corporations (SPACs) to be listed on the TSX.

A SPAC is a holding or "shell" company, with no current operations or business, that completes an initial public offering to raise a substantial amount of capital and then uses that capital to acquire one or more operating businesses at a later date, similar to a reverse merger or reverse take-over. This type of entity has also been known as a "blank cheque" company in the United States.

The introduction of SPACs to the Canadian marketplace would be a significant departure from the current regulatory regime. Although capital pool companies (CPCs) are permitted on the TSX Venture Exchange for small issuers with a market capitalization of less than $2 million, the TSX requires full disclosure of the proposed use of proceeds raised