Qualifying transactions usually begin formally when shareholders and the CPC establish a Memorandum of Understanding (MOU) that defines the terms of the agreement. As a general rule, the CPC must include a financing plan for the transaction in each ACT. Canada does not have as strong a venture capital industry as the United States, so companies tend to list the TSX earlier in their growth. The disadvantage of this earlier listing in terms of access to capital is that, due to their inexperience as a public enterprise and the dual requirements of public liability, companies can be easily abandoned by investors at a time when operational expansion is critical. Capital pool companies were created and encouraged to inject start-up companies with capital advice and board advice at the director level, which are provided in the United States by venture capitalists. The Capital Pool Company (CPC) program is a unique Canadian invention that supports private companies in the earlier phase to complete a public transaction. A qualifying transaction is effectively a reverse acquisition of a CPC by an operating entity that will access the CPC`s capital, shareholders and expertise to close a listing on the TSX venture exchange or the Toronto Stock Exchange. The CPC then uses these funds to find an investment opportunity in a growing business. Once CPC has completed its qualifying transaction and acquired an operating company that meets the requirements of the trading list, its shares will continue to be traded as a regular listing on the TSX Venture Exchange. Private companies go public to raise capital, to finance their activity and growth. Funding is provided either by equity financing, i.e. by public sector issuance actions, or by the loan for which a loan is granted.
In the United States, equity financing is done through an IPO. In Canada, equity financing can be achieved through other means through a qualified transaction and the formation of a private equity firm (CPC). Essentially, a finished list with experienced directors helps reduce costs for the company and reduces the risk of IPOs. For investors, the decision to acquire shares in a CPC requires greater diligence on the founders of CPC themselves, as they will decide what type of business they are buying and how they should manage after the initial investment. Even if a target has been proposed, as is the case with some CPCs, there is no guarantee that this will happen. Therefore, investors need to have confidence in the management of the CPC and their ability to create values for businesses in general and not for a particular company. The directors of the CPC focus on the acquisition of a private company and, at the end of the transaction, that company has access to the capital and the listing established by the capital pool company. The private company then becomes a wholly owned subsidiary of the CPC. Qualifying transactions must be completed by a CPC within 24 months of the date of the CPC`s first listing, when a prospectus is filed and a new listing on the TSX Venture Exchange is requested. In its activities, the consortium relies on the most modern and tested technical solutions. This IPO method is more effective than a traditional IPO, as private companies are not required, unlike the IPO, to bear ex ante costs before marketing shares to potential investors. Since, by its very nature, the private equity firm will not have its own business, the trading line in which the private company operates becomes the Activity of the CPC.
Capital pool companies and related qualifying transactions are the most commonly used method of going public on the TSX Venture Exchange in Canada, unlike IPOs. The PCs available are the ones that did not announce QT. A detailed guide for state-owned enterprises looking for a double list. A capital company (CPC) is