The difference between the TSX and the TSXV (and why we care)

TSX TSXV BannerBack in July of 2005, TAG Oil Ltd. successfully commenced listing on the TSX-Venture Exchange (“TSXV”) under the trading symbol “TAO.” Fast forward to July 2011 and the Company graduated to the Toronto Stock Exchange (“TSX”).

What is the difference between these two Canadian-recognized exchanges? Well actually quite a bit.

The main purpose of the TSXV is to provide a platform to access capital for earlier stage or emerging companies through access to public venture capital that helps facilitate growth. In accordance with that mandate, the TSXV has much less stringent minimum listing requirements than the TSX.

The TSXV gives companies the chance to join the markets through two different tiers:

  • Tier 1 is the premier TSXV tier, where TAG Oil started its journey. It’s reserved for more advanced issuers with more significant financial resources.
  • Tier 2 is the tier where the majority of the TSXV’s listed issuers trade, which requires far fewer listing requirements.

Now, however, TAG Oil trades on the Toronto Stock Exchange (TSX), one of the world’s largest exchanges, and the senior equity market in Canada.

The TSX can be viewed as a platform that provides a market for well-established businesses and management teams with experience in public markets. What are the benefits? It provides issuers with:

  • A larger reach to international institutional investors
  • Enhanced liquidity
  • Specialized indices
  • Greater visibility
  • Opportunities for greater analyst coverage

tsx imageThe corporate governance policies and disclosure requirements of the TSX are generally stricter than the TSXV too, as the TSXV’s listing and corporate governance policies are tailored toward small-cap companies.

Since TAG Oil has grown from its early roots to the well-established company it is today, moving from a venture-listed company to the benefits the TSX brings, makes sense. We’ve taken the time to position TAG with a highly skilled and experienced management team, maintained a strong balance sheet through challenging times, retained steady production, and nurtured a portfolio of high-impact exploration targets, all of which has paved the way to the TSX, with the goal of providing our shareholders with long-term value and excitement.

In accordance with National Instrument 58-101 – Disclosure of Corporate Governance Practices, here are some comparisons of the disclosure requirements. This comparison is not an exhaustive list, rather it is meant to provide a general understanding of the listing requirements and the obligations that are associated with maintaining a listing on both the TSX and the TSXV exchanges, mainly with regards to corporate governance and continuous disclosure.

 

  TSX Issuers TSXV Issuers

Board of Directors

Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If they do, disclose the number of meetings held. I they do not, describe what the board does to provide leadership for its independent directors.

Disclose the identity of the directors who are independent and the directors who are not independent, and the reason for such non-independence. Disclose whether or not a majority of directors are independent, and if not, how the board exercises independent judgement.

Disclose whether or not the chair of the board is an independent director. If the chair is independent, describe his or her role and responsibilities. If he or she is not independent, describe what the board does to provide leadership for its independent directors.

Disclose the attendance record of each director for all board meetings.

Disclose how the board facilitates its exercise of independent supervision over management.

Board Mandate

Disclose the board’s written mandate.

Not applicable

Position Descriptions

Disclose whether or not the board has developed written position descriptions for the chair and the chair of each board committee.

Not applicable

Orientation and Continuing Education

Describe what measures the board takes to orient new directors regarding the role of the board, its committees and directors, and the nature and operation of the issuer’s business.

Describe what measures, if any, the board takes to provide continuing education for its directors. If none, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.

Describe what steps, if any, the board takes to orient new board members, and describe any measures the board takes to provide continuing education to directors.

Ethical Business Conduct

Disclose whether or not the board has adopted a written code and how to obtain a copy. Describe how the board monitors compliance with its code.

Provide a cross reference to any material change report filed since the beginning of the issuer’s most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.

Describe any steps the board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest.

Describe what steps, if any, the board takes to encourage and promote a culture of ethical business conduct.

Nomination of Directors

Disclose whether or not the board has a nominating committee composed entirely of independent directors.

If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.

Describe what steps, if any, are taken to identify new candidates for board nomination, including: who identifies new candidates & the process used.

Compensation

Disclose whether or not the board has a compensation committee composed entirely of independent directors.

If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.

If a compensation consultant or advisor has been retained to assist in determining compensation for any of the issuer’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained.

Describe what steps, if any, are taken to determine compensation for the directors and CEO, including: who determines compensation & the process used.

Director Term Limits and Board Renewal

Disclose whether or not the issuer has adopted term limits for the directors or other mechanisms of board renewal and, if so, include a description of those limits of mechanisms. If the issuer has not, disclose why it has not done so.

Not applicable

Representation of Women as Executives and Board Members

TSX issuers will be required to disclose: (i) the number and proportion of executive officers of the issuer, including all major subsidiaries of the issuer, who are women; (ii) whether they have adopted a policy for the identification and nomination of female directors; (iii) whether they consider the level of representation of women on their boards and in executive officer positions when nominating candidates for election or appointment to these positions; and (iv) whether they have adopted targets for the proportion of women on their boards or in executive officer positions. Further, TSX issuers who have not considered or adopted policies with respect to the representation of women on boards and in executive positions are required to explain why they have not done so.

Note that this is only a disclosure requirement as there is not a requirement to have woman on boards or in management of TSX issuers.

Not applicable

For further information on the specific listing requirements for oil & gas (exploration or producing) companies on both the TSXV and the TSX, please refer to: https://www.tsx.com/resource/en/107.