TSX Enterprise Change Adopts Modifications To Capital Pool Firm Insurance policies – Company/Industrial Regulation

Topic and Section Reference

New guidelines

Previous guidelines

Start-up capital and total funds: Section 3.2 (f) (i) A maximum of USD 1,000,000 starting capital below the IPO price

Maximum of 500,000 USD starting capital

raised below the IPO price

Section 3.2 (k)

Total maximum of $ 10,000,000

Funds raised from a CPC

Total maximum of USD 5,000,000

Funds raised from a CPC

No transmission to NEX: Deletion of section 14.13 of the previous directive

No transfer to NEX if the qualifying transaction is not completed within 24 hours

Months after listing

No transfer to NEX if the qualifying transaction is not completed within 24 hours

Months after listing

Distribution: Section 3.2 (l) 150 public shareholders with at least 1,000 shares each 200 public shareholders with at least 1,000 shares each Section 3.2 (l) Public float per Policy 2.1 for Tier 2 – currently 500,000 shares Public float 1,000,000 shares Section 3.2 (l) Public shareholders collectively hold at least 20% of the outstanding shares Topic and Section Reference New guidelines Previous guidelines Distribution: Section 3.2 (m)

2% and 4% limits do not apply to

25% of the IPO

Limits of 2% and 4% apply to the entire IPO Section 3.2 (n) Not a new insider at the completion of the IPO unless stated in the CPC prospectus Directors and officers: Section 3.2 (a)

CPC – The majority must be residents of

Canada / USA or public company

Experience (allowed internationally

Directors)

CPC – All must be Canada / United States resident or public company

Experience

Deletion of section 12.1 (d) of the previous directive

Resulting Issuer – No restrictions (trust

to guideline 3.1)

Resulting Issuer – The majority must be Canadian / US based or have experience in public companies Section 3.2 (d)

CPC – a person can be CEO, CFO

and secretary

CPC – A person cannot be a CEO, CFO, and secretary Agents & Pro Group: Section 5.1

IPO Agent does not have to be a member of

the exchange

The IPO agent must be a member of the exchange Section 5.2 (c) (iv) Agent options with a maximum term of 5 years Agent options with a maximum duration of 2 years Deletion of section 14.8 of the previous directive

Shares acquired by the Pro Group on or

above the IPO price are not subject

Crooked

All shares acquired by the Pro Group are subject to an escrow account regardless of the issue price Deletion of section 14.8 of the previous directive

Shares issued as part of the Pro Group

the qualifying transaction are not

subject to a four-month holding period

unless required by law

All shares issued to the Pro Group as part of the qualifying transaction are subject to a four-month holding period CPC stock options: Section 6.1 Stock Option Plan – 10% rolling based on the number of shares outstanding at the time of grant

Stock Option Plan – 10% fixed based on the number of shares issued on

Completion of the IPO

Section 6.4 The minimum exercise price for CPC stock options granted prior to the IPO is the lowest issue price for seed stocks. after the IPO price per policy 4.4 – Incentive stock options

The minimum exercise price for CPC stock options is higher than the IPO price and

Reduced market price

Section 10.1

Escrow for all CPC stock options and

all option shares that were issued upon exercise

Price that is below the IPO price

Topic and Section Reference New guidelines Previous guidelines Crooked: Section 10.1

Escrow applies to:

– Seed shares issued below the IPO price;

– Shares acquired by the Treasury of

Non-independent parties to the CPC;

– CPC stock options; and

– Shares issued upon exercise of the CPC

Stock options at an exercise price that

is less than the IPO price

Escrow applies to:

– Seed shares issued below the IPO price;

– Stocks acquired from the Treasury by non-arm’s length parties of the CPC;

– Shares bought by a supervisor on the secondary market; and

– All seed shares issued to a member of the Aggregate Pro Group regardless of price

Escrow Release: Section 10.2

18 months trust account: trust papers

posted as 25% on Final QT

Exchange Bulletin and 25% respectively 6, 12 and 18 months after that date

18 months escrow account: If the resulting issuer is

listed on Tier 1, published as 25% in the Final QT Exchange Bulletin and 25% in each of the 6, 12 and 18 months after that date. 36 Month Escrow: If the resulting issuer is listed in Tier 2, it will be released as 10% in the Final QT Exchange Bulletin and 15% in each of the 6, 12, 18, 24, 30 and 36 months after that date

Section 10.2

CPC stock options and option stocks

published in the Final QT Exchange Bulletin

unless granted prior to the IPO

Exercise price below the IPO price

Deletion of section 14.13 of the former

politics

No need to cancel a seed

Stocks if the qualifying transaction is

not completed within 24 months of completion

listing

Certain Seed Shares will have to be canceled if the Qualifying Transaction is not completed within 24 months of the listing and the CPC is transferred to

NEX

Topic and Section Reference

New guidelines

Previous guidelines

Use of the proceeds: Section 7.1

G&A costs are capped at $ 3,000 per person

month

Non-QT costs (e.g. G&A) are limited to

less than 30% of the gross proceeds

of CPC and $ 210,000 over the lifetime of CPC

Sections 7.1 and 7.2

Extended guidance on permitted uses

of proceeds and payments to NonArm’s Length Parties

Section 7.4

to those in Guideline 5.2 – Changes to

Business and readmission

Private placements: Section 9.3

Common shares only before the qualifying transaction closes, but at the same time

Funding can be provided under certain circumstances

include issuing a subscription

Receipts or special warrants that

convert to listed stocks or listed stocks

Shares and warrants after the conclusion of

the qualifying transaction

Common stock only prior to the completion of the qualifying transaction Section 9.7

Pre-Qualifying Transaction – Compensation up to 10% in cash plus

10% warrants allowed

Sections 9.4, 9.5 and 9.6 and Section 7.4

Bridge financing and at the same time

Financing provisions similar to those in

Policy 5.2 – Business Changes and

Readmission

QT Finder Fees: Section 7.3 (a)

The finder fee can be paid to the person who

is not a non-arm’s length party

CPC

The Finder Fee can be paid to an individual who is not an independent party to the CPC Section 7.3 (b)

The Finder Fee can be paid to a NonArm’s Length party to the CPC if: – a Qualifying Transaction is not a NonArm’s Length Qualifying Transaction; – Qualifying Transaction is not a transaction between the CPC and an existing public company.

– The finder fee is to be paid in cash

Stocks and / or warrants; – The amount of simultaneous funding is not included in the value of the measurable benefit. and – the approval of disinterested shareholders is obtained

The Finder Fee may not be able to be paid to a NonArm’s Length Party of the CPC Annual financial statements: Form 3B1 / 3B2

CPC:

– Annual closing 120 days

– Interim financial statements 60 days

CPC:

– Annual closing 120 days

– Interim financial statements 60 days

Form 3B1 / 3B2

Target company:

– Annual closing 90 days

– Interim financial statements 45 days

Target company:

– Annual finances

Statements 90 days

– Interim financial statements 60 days

Other points: Section 1.1 CPC can be a trust Trust structure not expressly permitted Section 1.1

The majority of minority permits can

to be obtained at a meeting of

Shareholders OR with written consent

The majority of the minority approval must be obtained at a meeting of

Shareholders

Deletion of section 14.9 of the previous directive

No restriction of the RTO within the first year

after a qualified transaction

Restriction of the RTO within the first year after the qualifying transaction Section 11.1 (e)

The resulting issuer can be a financing

Issuer (still cannot be a mutual fund)

The resulting issuer could not be a financial issuer