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With the formation of the new Canadian Venture Stock Exchange, the Alberta Junior Capital Pools and B.C. Venture Capital Pool programs have been merged into a single new "Capital Pool" program.
The new Capital Pool program is in effect a merger of the provisions which previously governed Alberta Junior Capital Pools and B.C. Venture Capital Pools. There are still two parts to the program, being an Initial Public Offering ("IPO") of shares to create a Capital Pool, and the entering into of a qualifying transaction approved by the new shareholders.
Important elements of the merged program are:
- minimum seed capital of $100,000 must be contributed by directors and officers at a minimum of $0.075 per share.
- minimum issue price to the public of $0.15 per share and maximum issue price of $0.30 per share.
- the issue to the public must be between a minimum of $200,000 and a maximum of $500,000; maximum issue price of seed shares and IPO shares is not to exceed $700,000.
- the minimum float must be 1,000,000 shares held by a minimum 300 common shareholders, excluding related parties
- there can be no enforceable agreement, or any other agreement or similar commitment with respect to a qualifying transaction at the time of the IPO.
- until completion of the qualifying transaction, no one is to be engaged to provide investor relations, promotional or market-making services.
- the IPO must contain details of any specific proposed qualifying transaction.
- proceeds of IPO must be used for the sole purpose of identifying and evaluating a potential qualified transaction; there are serious restrictions on the use of funds for general and administrative expenses or for payments to related parties.
- seed shares and other shares held by related parties must be placed in escrow, releaseable 10% upon completion of the qualifying transaction and 15% every six months thereafter.
- the qualifying transaction must be approved by a majority of the non-related shareholders, and the Information Circular with respect to the meeting of shareholders must be approved by the Canadian Venture Exchange.
Until March 1, 2000, JCP's and VCP's may continue to be formed and be governed under the old rules or may elect the new rules. Any Prospectus issued after March 1, 2000, and any qualifying transaction after March 1, 2000 will be required to comply with the new rules. Existing JCP's which elect to come under the new rules and wish to consider foreign transactions will be required to issue a news release and file an appropriate material change report.
If you believe that a Capital Pool offering may be beneficial for your business, we would be pleased to discuss further details of the program with you in a personal meeting.