Frequently Asked Questions
- How much does it cost to go public on TSX Equity Exchanges?
- How long does the process take?
- Do I have to give up control of my company to go public?
- What are some of the pros and cons of going public?
- Which method of listing is the best option for my company?
- Does my company have to incorporate in Canada?
- Who sets the initial share price?
- How much capital should be raised on an IPO?
- Are there any courses on being a public company
- How do the listing requirements of TSX Venture Exchange compare to the listing requirements of Toronto Stock Exchange?
- How does the CPC program compare to an IPO?
- What are the alternatives to going public?
- What is the role of a Registered Trader?
- How is a trading symbol assigned?
Actual individual and total costs will vary from these estimated ranges depending on the nature and complexity of the transaction and relative sophistication of the private company, its management, internal controls and reporting processes.
|Toronto Stock Exchange||TSX Venture Exchange|
|Listing Fees||$10,000 – $200,000||$7,500 – $40,000|
|Accounting and Auditing Fees||$75,000 – $100,000||$25,000 – $100,000|
|Legal Fees||$400,000 – $750,000||$75,000+|
|Underwriters’ commission||4 – 6 %||Up to 12 %|
Other fees to consider include:
Securities Commission fees ♦ Transfer agency fees ♦ Investor relations costs ♦ Geological or engineering reports ♦ Printing and translation costs ♦ Valuation reports ♦ Director and Officer liability insurance
Going forward, the cost of fulfilling the securities commissions filing requirements, and the sustaining fees and additional listing fees of the Exchanges must be taken into account. The company will be required to file periodic, quarterly and annual reports with the securities commissions and the Exchanges that will require legal, accounting, printing and possibly translation costs. Executives will need to channel significant time away from their regular duties to oversee the preparation of these filings, and the CEO and the CFO will need to certify the accuracy of the financial statements. The company will also need to ensure the efficiency of its internal controls, which may require additional hiring or outsourcing.
Listing Fees – TSX Equity Exchanges require an initial fee and subsequent annual sustaining fees
Accounting and Auditing Fees – are incurred for the audit of the financial statements as well as for the auditor’s participation in the preparation of the Listing Document and the consent and comfort letters for the exchanges, securities commissions and underwriters. The fees will increase significantly if separate financial audits are required for businesses acquired or to be acquired; for guarantors, or for unconsolidated subsidiaries.
Legal Fees – are incurred for the preparation of the Listing Document, negotiation of the underwriting agreement, “housekeeping,” and other matters that arise during the going public process. The legal fees will be higher if a complex reorganization or the negotiation of significant contracts is required.
Underwriters’ commission – the underwriters’ discount, or commission, is typically the single largest cost of going public, and is negotiated between the company and the lead underwriter. Factors that affect the discount are the size of the offering, the type of underwriting, the going rate for offerings of similar size and complexity, and the anticipated effort required to sell the company’s stock. In smaller offerings, underwriters may seek other compensation, such as reimbursement for some of their expenses, warrants to purchase stock, or the issuance of stock to them prior to the offering at a price below the anticipated price to the public.
The time to go public depends on the complexity of the company, quality of documentation provided by the company and whether there are any outstanding issues. On average, the process takes three to six months to complete. Below is an example of the timeline of an IPO through a prospectus offering
|Drafting preliminary prospectus||2-5|
|Comments from securities commission||7-10|
|Response to comments||10-12|
|File final prospectus||13-14|
|Auditors work on annual statements, interim statements and comfort letter||2-13|
|Ongoing legal work||2-13|
|Due diligence by underwriters, including formal review sessions with management, counsel and auditors||2-13|
|Preparation of marketing documents and roadshow presentation||2-10|
|Institutional one-on-one meetings||10-13|
|Closing and settlement||14-15|
No. Many companies structure their offerings so that after the initial offering, the owner(s) still have control. If the shares held by the public are widely distributed, management may maintain effective control, even when it owns less than 50 percent of the shares. If more than 50 percent of a company’s shares are sold to just a few outside individuals, the original owners could lose control of the company.
|Access to cash and long term capital||New listing and ongoing expenses|
|Increased market value||Loss of privacy|
|Exit strategy||Potential loss of control|
|Equity offerings||Pressure for performance|
|Prestige and reputation||Restrictions on inside stock sales|
|Attract and keep quality personnel||Time commitment to investor communications|
|Less dilution||Difficult to return to private entity|
|Mergers and acquistions through stock transactions (freeing up cash)|
TSX Equity Exchanges provide four ways in which to take your company public:
The best option for your company will depend on your financial, legal, auditing and business strategy requirements. Your team of advisors will assist you with this decision.
There are no listing, regulatory or financial requirements for international issuers to incorporate in Canada. However, it is recommended that issuers have a strategy to develop relationships with the investment community and a program to satisfy all of their reporting and public company obligations in Canada. This may be achieved by having a member of the board of directors or management, an employee or a consultant of the issuer situated in Canada.
The company decides the initial share price, by agreement with the broker/investment dealer. However, consideration to the marketplace is the main factor. The underwriter must ensure the price is attractive for investors by reflecting the true value of the company, and its future growth prospects. Other price influences are past earnings, economic climate, projected future growth of the company, potential resource prospects and any special considerations.
This depends on the amount of funds the company needs to raise and, the interest of the investors. The company must be able to justify their specific need for capital to investors. Management must also carefully consider the degree of control they wish to retain. When a company goes public, a reasonable percentage of the shares must be publicly owned and have a minimum market value of $4,000,0001 for Toronto Stock Exchange and depending on the type of listing, $500,000 for Tier 1 and $1,000,000 for Tier 2 on TSX Venture Exchange. See Sector Summaries for further details.
1 A TSX non-exempt Technology issuer is required to have $10 million held by public shareholders
Managing the responsibilities of corporate governance and continuous disclosure can be challenging for issuers. TSX offers interactive workshops that provide issuers with the critical information needed to be a successful public company.
10. How do the listing requirements of TSX Venture Exchange compare to the listing requirements of Toronto Stock Exchange?
The following chart provides a sampling of some of the listing requirements of TSX Venture Exchange and Toronto Stock Exchange for companies in the industrial sector (for illustration purposes only).
|Net tangible assets||Pre-tax earnings|
|TSX Venture Tier 2||CDN $500,000||CDN $50,000|
|TSX Venture Tier 1||CDN $1 million||CDN $100,000|
|Toronto Stock Exchange||CDN $7.5 million||CDN $200,000|
Click here to obtain more detailed information on listing requirements.
The CPC program gives emerging businesses a foothold on TSX Venture Exchange and access to public financing when a traditional IPO is not the preferred route. It is a flexible, straightforward solution for smaller companies that are anxious to take the underwriting risk of an IPO out of the equation. And it enables a CPC with a focused vision to build momentum, raising capital for the purpose of identifying a qualifying transaction, and ultimately obtaining a full listing on TSX Venture Exchange.
Instead of going public, your company might consider seeking capital from a number of private financing sources, such as angel investors, venture capitalists, government agencies and banks.
A Registered Trader is assigned to your stock to maintain a fair, orderly and continuous two-sided market. A Registered Trader helps reduce volatility and enhance liquidity by buying or selling against the market. Investors are assured of fair pricing, thanks to the Registered Trader’s commitment to trade all orders of a certain size (known as a minimum guaranteed fill) within a set spread goal (the price difference between buy and sell orders). The minimum guaranteed fill and spread goal vary by company, depending on issuer size, public float and trading activity.
You can request specific trading symbols and we will try to accommodate your choices. If none of the preferred symbols are available, Toronto Stock Exchange will assign a symbol. Symbols previously used by other issuers cannot be reassigned for 53 weeks.
Please contact us at firstname.lastname@example.org for more information.