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companies are considering going public in Canada

Torys LLP Kevin M. Morris , Daniel P. Raglan and Andrew J. Beck Canada, USA June 10 2010 A Canadian IPO can be particularly attractive for companies of pre-Nasdaq size (from a market cap of C$50 million to C$500 million) and for those companies that are in the energy, metals and mining, clean technology or technology sectors. More than 370 foreign companies trade on the Toronto Stock Exchange and the TSX Venture Exchange and, of these, approximately 170 are either incorporated in the United States or have their principal headquarters and operations in the United States. The TSX is the worlds second largest exchange by number of issuers and the eighth largest by market capitalization. Various factors have combined to lead a number of international businesses particularly from the United States, but also from China, Israel, the United Kingdom and other jurisdictions to list in Canada: the mobility of capital, ease of communication, marketing efforts by Canadian investment professionals and the TSX, the sophistication of the Canadian investment community and the predictability of the Canadian regulatory framework. For the most part, the IPO (initial public offering) process for non-Canadian companies follows the general timeline for the IPO of a Canadian domestic business. The limiting factors for such foreign companies, from a time-to-execution perspective, will most often be tax planning and accounting compliance. U.S. companies will also need to consider U.S. securities laws when deciding how to go public in Canada: Option 1: Registration with the U.S. Securities and Exchange Commission. Several U.S. companies have concluded that there are significant enough advantages to a TSX-only listing that it is worth pursuing an SEC registration process and taking on U.S. Exchange Act reporting obligations. For these companies, the timing of SEC review will dictate the overall timing of the IPO. The Canadian prospectus is a relatively straightforward amendment or supplement to the U.S. prospectus. Option 2: Regulation A offering. A U.S. company would also be able to go public on the TSX Venture Exchange through a Regulation A offering. This would require the filing of an Offering Statement with the SEC that would be subject to review but would not subject the company to ongoing U.S. Exchange Act reporting obligations. However, U.S. companies relying on Regulation A are limited to a US$5 million aggregate offering in any 12-month period. Option 3: Exempt offering. A small number of U.S. companies have completed a Canadian public offering without also registering their shares with the SEC. Those shares were sold in Canada under an exemption from U.S. registration requirements and traded subject to resale restrictions under U.S. securities laws. The trading symbols for these shares included a .S a reference to the Regulation S exemption from U.S. registration requirements. The resale restrictions of this approach severely inhibit normal trading in the stock. For example, brokers may not execute a trade if they know the buyer is in the United States, is a U.S. person or is acting on behalf of a U.S. person. Perhaps not surprisingly, no U.S. companies currently trade under the Regulation S exemption on the TSX, although the option remains available. http://www.lexology.com/library/detail.aspx?g=00170cac-8056-41c0-8f72-0ab1e019cfad