On April 7, 2014 the TSX Venture Exchange (TSX-V) published a bulletin entitled Discretionary Waivers of $0.05 Minimum Pricing Requirement, which provides issuers listed on the TSX-V with guidance on the circumstances in which the TSX-V will look more favourably upon an issuer’s request to waive the $0.05 minimum pricing requirement.  Generally, the TSX-V is not amenable to waiving the minimum pricing requirement; however, the TSX-V has indicated its willingness to thoughtfully consider the granting of waivers from the minimum pricing requirement in the following circumstances:

• Rights offering completed in accordance with TSX-V Policy 4.5 – Rights Offerings.  This would permit the exercise price of the rights to be less than $0.05 but no less than $0.01.

• Pending Share Consolidation.  Where an issuer’s shares are trading below the minimum pricing requirement, the issuer would be required to consolidate its shares prior to conducting a financing of its shares at a price per share that is less than $0.05.  In order to complete a consolidation of shares, an issuer would be required to obtain shareholder approval, which may hinder the issuer’s ability to complete a financing.  The TSX-V has indicated that it may permit an issuer to complete a financing below the minimum pricing requirement (but at not less than a 25% discount to the last closing price of the issuer’s shares prior to the announcement of the financing) if the issuer satisfies the TSX-V that the completion of the share consolidation in a reasonable period of time following the closing of the financing is certain and will be completed at a consolidation ratio that will result in the financing price to be not less than $0.05 per share on a post-consolidation basis.  To satisfy the TSX-V, the issuer will be required to (i) obtain written confirmation from shareholders holding not less than 50% (or such lesser amount acceptable to the TSX-V) of the issuer’s outstanding shares (as to be constituted post-financing) that they will vote in favour of the consolidation, (ii) undertake to the TSX-V to seek such shareholder approval no later than the issuer’s next annual meeting and six months from the completion of the financing, (iii) undertake to the TSX-V to give effect to the consolidation in as expeditious a manner as is possible after shareholder approval is obtained, and (iv) disclose the intent to complete the consolidation at the time of the announcement of the financing and at the time of the closing of the financing.

• Special warrant offering at a price of less than the minimum pricing requirement (but not less than a 25% discount to the last closing price of the issuer’s shares prior to the announcement of the financing) if the conversion of the special warrants is conditional upon completion of a share consolidation at a ratio that will result in the financing price to be not less than $0.05 per share on a post-consolidation basis.

• Convertible debenture offering where the debentures have a conversion price of less than the minimum pricing requirement (but not less than the last closing price of the issuer’s shares prior to the announcement of the financing) if the ability to convert is conditional upon the completion of a share consolidation (with the post-consolidation adjustment to the conversion price being not less than $0.05 in the first year of the term and not less than $0.10 thereafter).

In addition to the special circumstances mentioned above, the TSX-V has also indicated that a waiver request satisfying the following criteria will be looked upon more favourably:

• To the extent that an issuer is able to rely on the new “existing shareholder exemption” described in Multilateral CSA Notice 45-313 Prospectus Exemption for Distributions to Existing Security Holders or an analogous exemption, the offering is made available to all of the issuer’s existing shareholders.

• The issuer is not listed on the NEX.

• On closing of the financing the Issuer will satisfy the applicable Tier 2 Continued Listing Requirements or will be considered to be suitable for Tier 2 status.

• The proposed offering price is not less than the last closing price of the issuer’s shares prior to the announcement of the financing (subject to a $0.01 minimum).

• The financing involves the issuance of listed shares and not securities convertible into listed shares, other than warrants (which warrants may not have an exercise price that is less than $0.05).

• The aggregate gross proceeds do not exceed the greater of $500,000 and an amount that is equal to the offering price multiplied by the number of pre-financing issued and outstanding shares.

• The proceeds of the financing will be used primarily to maintain or preserve the issuer’s existing operations, activities and assets and will not be used primarily to pay management fees.

• The issuer will disclose to the public at the time of the announcement of the financing and at the time of the closing of the financing the proposed use of the proceeds of the financing (including any proposed payments to related parties).

The TSX-V’s approach to discretionary waiver applications appears to be premised on the fact that junior companies listed on the TSX-V, many of whom are resource issuers, are continuing to find it difficult to raise capital in the current economic environment.  Issuers listed on the TSX-V should strongly consider whether a discretionary waiver of the minimum pricing requirements is achievable.  In doing so, a prior consultation with the TSX-V is highly recommended, in order to assess whether a waiver is likely to be granted in a particular circumstance.