Effective January 26, 2015, the TSX Venture Exchange (the “TSXV”) is implementing amendments to its Policy 4.1 – Private Placements (“Policy 4.1”) and the related forms.

The amendments to Policy 4.1 that are substantive primarily relate to the following:

1. Expanded Guidance on Notice and Acceptance ProceduresThe summary of the private placement procedure in Policy 4.1 has been revised to more clearly set out the steps involved in the notice and acceptance process for a private placement.
2. Part and Parcel Pricing ExceptionThe part and parcel pricing exemption has been redrafted to facilitate a better understanding of the existing pricing rules and to clarify the warrant exercise premium rules. The exercise price of warrants issued as part of a concurrent financing to a Qualifying Transaction, Reverse Takeover or Change of Business do not need to be set at a premium to the applicable Market Price, although the exercise price cannot be less than the applicable Market Price.
3. News ReleasesThe amendments provide clarification and expanded guidance on the news release requirements relating to private placements. For example, if an issuer uses a price reservation form to reserve the offering price, the issuer must still issue a comprehensive news release disclosing the terms of the private placement on the earlier of the date the private placement constitutes a material change for that issuer and 30 days after the price reservation date.
4. Filing RequirementsThe amendments provide more detailed guidance regarding the filing requirements applicable to an application for conditional acceptance of a private placement and to an application for final acceptance of a private placement.
5. Closing of the Private PlacementThe amendments provide more detailed guidance on the TSXV’s conditions to closing, timeframes for closing and final filing requirements. These amendments clarify that where a private placement will result in the creation of new insiders or control persons, the issuer cannot close on subscriptions from those persons until the TSXV has provided final acceptance for the private placement.
6. Convertible SecuritiesA new section was added to Policy 4.1 to set out the requirements applicable to obtaining TSXV acceptance for an amendment to the terms of previously issued convertible securities. The amendments to Policy 4.1 provide, among other things, that any amendment to the terms of convertible securities is subject to TSXV acceptance.

   Also, the amendments provide clarification on the acceptability of principal and interest or dividend obligations for convertible securities and on the conversion terms for convertible securities. Where the terms of any convertible securities provide that any accrued interest or dividends may be paid through the issuance of securities of the issuer, the price per security must not be less than the Market Price of the Listed Shares at the time the accrued interest or dividends become payable, and such payment in securities will be subject to prior TSXV acceptance with the application for such TSXV acceptance to be made at the time the accrued interest or dividends become payable.

7. Implementation of V-File and Discontinuation of the Expedited Filing SystemThe amendments to Policy 4.1 provide for the use of the TSXV’s new electronic filing system for private placement submissions, called “V-File”, which automates certain components of the TSXV’s review and acceptance process for private placement submissions. With the implementation of V-File, the TSXV is discontinuing its Expedited Private Placement System as the ability to file via V-File makes the existing Expedited Private Placement System redundant.

The amendments to Policy 4.1 also clarify the following:

• The subscription price in a private placement must be paid in cash paid by the placee to the issuer. If the consideration is in a form other than cash (e.g. non-cash assets or the settlement of debt), then the transaction will be subject to the requirements set forth in other applicable TSXV policies. For example, private placements with creditors where either the cash received by the issuer from the creditor will be used to repay the debt to the creditor or the creditor’s subscription price is offset against the debt, will be subject to the requirements and limitations set forth in Policy 4.3 – Shares for Debt of the TSXV.
• An issuer’s sale for cash of any of its previously issued listed shares that were purchased or otherwise acquired by the issuer (e.g. pursuant to an issuer bid) will be treated as a private placement for the purposes of Policy 4.1.
• The TSXV may treat a transaction or series of transactions that has the effect of directly or indirectly financing the issuer in exchange for the direct or indirect issuance of securities of the issuer as a private placement for the purposes of Policy 4.1.

All capitalized terms that are used but not defined in this article have the meaning ascribed to those terms in the policies of the TSXV.

The full text of the amended Policy 4.1 and a blackline showing the amendments can be found here.