This Policy addresses the filing and procedural requirements for Issuers proposing to distribute securities to the public pursuant to a Prospectus.
This Policy applies to public offerings of securities carried out by Issuers whose securities are already listed for trading on the Green Stock Exchange (GREENSX).
It does not apply to an Issuer proposing to carry out a Direct Public Offering ("DPO") or Initial Public Offering ("IPO") of its securities concurrent with an Application for Listing using a prospectus, which is governed by Policy 2.3—Listing Procedures, and to Policy 2.4—Issuing Company .
1.1 General
A Prospectus offering conducted by an Issuer must be prepared in accordance with the requirements of applicable Securities Laws, exemptions of security laws and will be vetted by the applicable Securities Commissions. When conducting a public offering by Prospectus, an Issuer must comply with the provisions of applicable Securities Laws. However, a Prospectus must also be filed with the Green Stock Exchange (GREENSX) to obtain the Green Stock Exchange (GREENSX)'s consent to the issuance of securities and the additional listing of the securities offered under the Prospectus.
The following provisions apply to all Prospectus filings, except where specifically provided.
1.2 Green Stock Exchange (GREENSX) Filing Requirements
(a) An Issuer conducting a Prospectus offering must file the following with the Green Stock Exchange (GREENSX):
(i) a copy of the Issuer's submission letter to the principal regulator and a copy of the preliminary Prospectus (including all financial statements, reports, certificates, and other documents which are required to accompany the Prospectus);
(ii) a copy of the Issuer's material agreements not previously filed with the Green Stock Exchange (GREENSX), including the Issuer's agreement with the Agent who will conduct the public offering;
(iii) a copy of all of the Issuer's letters to and from each Securities Commission relating to the Prospectus offering;
(iv) a copy of the Issuer's final Prospectus and any amendments (including all financial statements, reports and other documents which are part of the Prospectus);
(v) a copy of each Securities Commission receipt for the final Prospectus; and
(vi) the applicable filing fee as prescribed by Policy 1.3—Schedule of Fees.
1.3 Pricing
(a) If Listed Shares are being offered, then the offering price will generally be the Market Price at the date of the final receipt for the Prospectus. The offering price will not normally be more than 20% lower than the Market Price. In any event, the offering price cannot be less than $0.05.
(b) At the time the pricing decision is made, an announcement, by news release, will be made immediately by the Issuer to announce the terms of the offering. The Issuer will immediately reconfirm any order received subject to price by directly conveying the terms of the offering to any potential purchaser whose order was received subject to price.
(c) The Green Stock Exchange (GREENSX) may require that the offering price be amended if there is Material Information regarding the affairs of the Issuer between the date the offering price is fixed and the closing of the offering.
(d) If the class of securities being offered is not a class of Listed Shares, then the minimum offering price must be $0.15.
1.4 Unit Offering
The following requirements apply to unit offerings that include Warrants:
(a) The total number of additional securities which may be issued pursuant to the exercise of Warrants cannot exceed the total number of securities initially issued as part of the unit offering;
(b) A Warrant in a unit offering must have an exercise price which is no less than the unit price and, if the unit price is at a discount to the Market Price, then the exercise price of the Warrant must be not less than the Market Price;
(c) A Warrant comprising part of a unit must not entitle the holder to acquire a Warrant upon exercise;
(d) Where the Warrants are trading, there shall be not less than 100,000 transferable Warrants in a unit offering;
(e) The maximum term of a Warrant shall be limited to two years commencing from the offering day;
(f) The transferable Warrants shall commence trading upon completion of the offering unless the Issuer has advised the Green Stock Exchange (GREENSX), before such time, that less than 75 persons, including Agents, hold at least one Board Lot of such Warrants;
(g) If the Green Stock Exchange (GREENSX) is of the opinion that there is an insufficient distribution of the outstanding transferable Warrants for an orderly market, the Green Stock Exchange (GREENSX) may declare that the remaining Warrants may only be traded on a cash basis. In any event, during the last four trading days, such Warrants shall only trade on a cash basis;
(h) The Green Stock Exchange (GREENSX) will not accept for filing Warrants in respect of which the Warrant trust indenture (or equivalent document) entitles the directors of the issuer to change the exercise price (except for adjustments in the event of share consolidations, splits, amalgamations or other corporate reorganizations) or which provides for the possibility of an accelerated expiry date; and
(i) The Green Stock Exchange (GREENSX) will cease trading of Warrants on the Green Stock Exchange (GREENSX) at 12:00 noon (Eastern Standard Time) on the expiry date.
1.5 Special Warrant Conversions Using a Prospectus
(a) A Prospectus can be used to qualify the units or shares to be issued upon exercise of special warrants issued by an Issuer.
(b) The following additional requirements which apply to special warrant conversions:
(i) the use of proceeds section of the Prospectus must disclose:
(A) the proceeds from the Private Placement of special warrants;
(B) whether any of the proceeds have been spent, and if so, a cross-reference to the detailed disclosure found elsewhere in the Prospectus; and
(C) the existing Working Capital as of a date within 30 days of the date of the final Prospectus, including the balance of the proceeds from the special warrant Private Placement;
(ii) if any placee will become an Insider on conversion of the special warrants, that fact must be disclosed in the Prospectus and the placee must submit an undertaking to file Insider reports with the appropriate Securities Commissions;
(iii) the Prospectus must disclose the number and dollar value of any special warrants acquired by the Agents; and
(iv) an Agent who has purchased special warrants must provide a Prospectus to all subsequent purchasers of the securities acquired by the Agent on conversion of the special warrants as this trade is likely to be a "distribution" pursuant to applicable Securities Laws.
1.6 Secondary Distributions
A secondary Distribution of securities is permitted to be effected pursuant to a Prospectus offering. However, if an offering consists of both a primary and a secondary Distribution, the primary Distribution must be completed before the commencement of the secondary Distribution and the price of the secondary Distribution must be the same as the primary Distribution. The selling Shareholders of any secondary offering must bear a proportionate share of the Agent's commission and offering costs.
1.7 Agent Compensation
(a) Member's Commission
A Member is free to negotiate its selling commission with the Issuer.
(b) Other Commissions
If persons receiving commissions are not Members, refer to Policy 5.1—Loans, Bonuses, Finder's Fees and Commissions for a calculation of the maximum commission that can be paid.
(c) Agent's Option
An Agent may be granted a non-transferable Agent's Option entitling it to subscribe for up to 25% of the total number of securities offered for sale under a Prospectus. The minimum exercise price of the Agent's Option will be:
(i) the offering price per share if the option is exercisable for shares only; or
(ii) the offering price per unit if the option is exercisable for units. Any Warrants underlying the units will be exercisable at the same price as the Warrants underlying the units offered to the public. The maximum term of an Agent's Option is the earlier of two years from the date of issuance and the term of any Warrants issued to the public as part of the offering.
(d) Selling Group Compensation
A Member may offer part of the commissions or Agent's Option from an offering to other licensed broker dealers and investment dealers who participate in a selling group. However, the allocation of the Agent's Option must be reported to the Green Stock Exchange (GREENSX) on conclusion of the offering.
(e) Greenshoe Option
An Issuer may grant a greenshoe option to an Agent to acquire further securities offered under a Prospectus in accordance with the following:
(i) the option must be limited to the lesser of 15% of the total number of securities involved in the offering or the actual number of securities sold by way of over-subscription;
(ii) the number of securities under option will be determined on the date of listing in relation to an DPO prospectus, and on the offering date in other circumstances;
(iii) the exercise price of the option must be at or above the same price as the net price of the securities to the Issuer's treasury;
(iv) the exercise period cannot exceed 60 calendar days after the closing date; and
(v) the Agent must advise the Green Stock Exchange (GREENSX) of the extent of any over-subscription at the time of closing of the offering.
1.8 Scope of Green Stock Exchange (GREENSX) Review
The Green Stock Exchange (GREENSX) reviews the required materials in order to accept any transactions disclosed in the Prospectus which have not been previously filed with the Green Stock Exchange (GREENSX) and to accept the listing of any securities to be issued pursuant to the Prospectus. Any transactions disclosed in the Prospectus, which have not been previously filed with the Green Stock Exchange (GREENSX) for acceptance must comply with Green Stock Exchange (GREENSX) Requirements. A Securities Commission will generally not issue a receipt for a final Prospectus until the Green Stock Exchange (GREENSX) has conditionally accepted the listing of the securities offered under the Prospectus.
