TSXV launches new Sandbox initiative

First introduced as part of the TSX Venture Exchange’s (“TSXV”) “Venture Forward” report in 2023, the TSXV Sandbox initiative (“Sandbox”) is a forum that is intended to facilitate listing applications that may not generally satisfy the standard listing regime of the ‎TSXV but, due to facts or situations unique to a particular issuer, otherwise warrant a listing on ‎the TSXV or an exemption from certain listing requirements. Sandbox will mirror an identical ‎feature rolled out by the TSX in 2019, by providing waivers or exemptions in exchange for certain ‎conditions.‎

Under the ordinary listing process, the TSXV may grant minor waivers on listing ‎requirements, whereas under Sandbox, ‎the TSXV may exercise greater discretion to waive or modify more substantial listing ‎requirements. See “Looking Forward” for a description of certain situations for which Sandbox may be suitable.

Eligibility

Unlike the ordinary listing procedure, Sandbox does not include a prescribed list of eligibility criteria or conditions to achieve TSXV ‎listing. Instead, the TSXV’s approach is tailored and adapted to each applicant. The TSXV will direct listing applicants to Sandbox on a discretionary basis when presented with a unique situation with novel and precedent setting issues. Sandbox is available to applicants from all industry sectors, ranging from early-stage to more seasoned companies. Further, there are no additional fees applicable to Sandbox applications.

At this time, Sandbox is only available for new listings (including ‎qualifying transactions and reverse takeover transactions), and is not available for private placements.‎

Implications of listing via TSXV Sandbox

Because Sandbox applications would not generally satisfy all of the TSXV listing requirements, the TSXV may apply additional conditions to facilitate the listing on an exceptional and discretionary basis. These conditions will be applied and tailored for the unique circumstances of the listing, and may include, but are not limited to:

• enhanced disclosure;
• enhanced vesting requirements or other restrictions on security-based compensation; and
• a distinct escrow regime.

If a TSXV Sandbox application is approved, issuers will be required to identify themselves as a Sandbox issuer in all of their public disclosure, and will be considered regular Tier 2 TSXV issuers. Therefore, issuers listed via Sandbox do not require a different symbol extension.

The TSXV will establish the conditions for exiting Sandbox at the time of the issuer’s initial listing, which conditions will be customized and adapted to address unique circumstances of the listing. Generally, issuers listed pursuant to Sandbox are expected to be able to exit Sandbox within twelve (12) months after listing.

Looking Forward

While the TSXV has indicated that there is no “typical” Sandbox applicant, it has described the following issuers who may benefit from listing via Sandbox:

• mining issuers with a substantially advanced Qualifying Property (as defined in Policy 1.1 of the TSXV company manual), meaning near production, and a substantial cash balance, but that do not meet the Working Capital and Financial Resources (each as defined in Policy 1.1 of the TSXV company manual) listing requirements due to short-term credit facilities and/or significant capital expenditures needed to achieve production. These issuers may be listed via Sandbox with appropriate conditions in place until the issuer completes a satisfactory financing or restructuring of its balance sheet; and
• issuers in any industry that combine certain high quality metrics (e.g. advanced business, significant management experience and expertise, substantial capital raise) with a need for the TSXV to consider waiving or modifying a significant listing requirement (e.g. financial resources, capital structure requirements, history of operations).

If you have any questions regarding Sandbox or any topic discussed above, please contact a member of the DLA ‎Piper (Canada) LLP Capital Markets group.‎