New Hold Period Considerations for CSE Listed Companies
New Hold Period Considerations for CSE Listed Companies
Further to their notice to the market in Q1(1), the Canadian Securities Exchange implemented policy changes on May 22, 2025 that set out applicable resale restrictions on securities issued in several cases. (2)These resale restrictions are in addition to any resale restrictions under applicable securities laws and they are separate from escrow requirements applicable to principals/related persons in the new listing context.
CSE Hold Periods
4-Month Holds
Subject to certain other exceptions, the new policies generally require all listed securities issued pursuant to a prospectus exemption to be subject to a 4-month hold period commencing on the date of issuance3. Some exceptions include:
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NV Issuers – for the few CSE listed issuers who have been approved as “NV Issuers” (Non-Venture), the general requirement for a 4-month hold period for all issuances of listed securities does not apply.
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Prospectus Level Disclosure – where a prospectus level disclosure document (ie. information circular, listing statement or take-over bid circular) is filed in connection with an acquisition or business combination, the new requirement will typically not apply.
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Other Disclosure Document – where securities are issued pursuant to a prospectus exemption in other circumstances and disclosure is made in the form of an offering document or circular as prescribed under securities laws, the new requirement will typically not apply.
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Adequate Pricing – where the issuance is a financing or debt settlement and the price of the securities is equal to or greater than the closing price or alternative market price established in accordance with CSE policies, the new requirement will typically not apply.
The CSE also has the discretion to provide written approval in other cases to issue the securities without a hold period, though we anticipate that discretion will be used very sparingly.
Extended Holds
Another concept introduced in the new policy changes is an “extended hold”, which will apply in certain cases determined by the CSE where additional disclosure is warranted (ie. a transaction that doesn’t meet the definition of a “Fundamental Change” but warrants additional disclosure)4. The extended hold period will run for a minimum of 10 days after the required disclosure is posted or any such longer period as may be appropriate, as determined by the CSE.
Takeaways
As with any exchange policies, we anticipate that there will be plenty of nuance to how these hold periods will apply and that it will be very fact dependent. We act for many listed venture issuers in Canada and, based on our experience, below is a list of key takeaways that we anticipate being relevant as a result of these policy changes:
1. Shares for Assets – One important advantage of getting listed earlier in a company’s life cycle on a venture exchange is the ability to use shares as currency for business/asset acquisitions. For CSE listed issuers, there will no longer be an ability to issue free trading shares in this context unless a prospectus level disclosure document accompanies the issuance. In the past, issuers often relied on the takeover bid prospectus exemption, which permitted free trading shares.1
2. Understand the Transaction Type – As there are now concepts of both a 4-month hold period and an extended hold period, in addition to requirements under applicable securities laws and escrow requirements that will continue to apply in the new listing context, it is important for CSE listed issuers to understand at the forefront which resale restrictions need to be considered and which do not.
3. Valuation and Related Party Aspects – The new policies provide the CSE with discretion to require a hold on certain issuances of securities despite the fact that the above exceptions may appear to apply. Certain facts that will be considered by the CSE include the relationship between the issuer and the person receiving securities and the value of the transaction/shares to be issued. Understand early on whether it is likely that discretion will be applied.
4. Limited Impact on Cash Financings – If you are issuing shares for cash or debt at or above market price, or if you are completing a financing with a prescribed disclosure document, these new policy changes won’t have much impact on your issuance.
Reach out to JJ Hudolin at DuMoulin Black to discuss these changes and how they may apply to your securities issuances as a CSE listed company.