NEO Exchange Inc. (“NEO”) announced the creation of a new publicly traded acquisition vehicle, the Growth Acquisition Corporation (“G-Corp”), designed to enable private, mid-market growth companies to access capital and the public market with reduced risks.
NEO has launched the G-Corp Pilot Program, which implements a listing framework similar to that of special purpose acquisition companies (SPACs). G-Corps are intended to provide mid-market growth companies that may not be large enough for a typical SPAC qualifying transaction with an avenue to go public.
While SPACs have existed for decades in the United States and have been in Canada since 2015, they have experienced significant growth in recent years.
Goodmans has played a leading role in the growth of SPACs in Canada, applying its extensive initial public offering (IPO) experience and deep expertise in capital markets innovation to the development of the sector. We look forward to working with sponsors, underwriters, potential targets and other interested parties to explore and utilize the G-Corp structure.
Like SPACs, G-Corps are blind pool entities that complete an IPO for the purpose of raising proceeds to be used to fund a qualifying transaction. The founders of a G-Corp acquire a promote interest of up to 20% of the G-Corp’s share capital immediately following the closing of the IPO and invest “at risk” capital to fund the G-Corp’s working capital. A G-Corp’s escrowed funds and any interest earned on the escrowed funds must be returned to investors if a qualifying transaction is not completed within the permitted timeline.
Although G-Corps are similar to SPACs in many respects, G-Corps have the following unique features:
- no redemption rights are provided to investors in connection with a G-Corp’s qualifying transaction;
- qualifying transactions must be approved by a majority shareholder vote excluding votes of the founders;
- a G-Corp must raise minimum IPO proceeds of $2 million;
- founders invest ‘at-risk’ capital in an amount sufficient to provide the G-Corp with at least $300,000 of working capital after payment of formation and IPO costs;
- 100% of the IPO proceeds are deposited in escrow until the qualifying transaction;
- the maximum permitted timeline is 24 months to identify a qualifying transaction and 27 months to close a qualifying transaction; and
- the minimum market capitalization must be $30 million or more immediately following closing of a qualifying transaction.
Listing as a G-Corp on the NEO
Issuers seeking to be listed through the G-Corp Pilot Program must schedule a pre-filing meeting with NEO to review the issuer’s eligibility and suitability for the program. As a precondition to listing as a G-Corp, NEO expects an applicant’s management team to have experience in private equity markets and/or with pooled capital vehicles. Once deemed eligible, applicants submit documentation to NEO describing the proposed structure of the G-Corp, which must be approved before NEO proceeds with its standard listings review process.
For further information on SPACs or G-Corps, please contact any member of our Capital Markets Group.
The authors would like to Sasha Seeber, Articling Student-at-Law, for his assistance in preparing this Update.
CSA Announces Results of Continuous Disclosure Review for Fiscal Years 2021 and 2022 Emphasizing Challenges of Disclosure During Economic UncertaintyThe Canadian Securities Administrators (CSA) recently published Staff Notice 51-364 (the “Staff Notice”), summarizing the results of its Continuous Disclosure Review Program for fiscal years…
Capital MarketsOverviewThe Ontario Securities Commission (OSC) has adopted a new prospectus exemption (the “Self-Certified Investor Prospectus Exemption”) applicable to prospective investors that meet certain…
EnergyOn June 21, 2022, the federal government registered the Clean Fuel Regulations (CFR)1 under the Canadian Environmental Protection Act, 1999.2 The goal of the CFR is to advance the growth of Canada’s…
CSA Creates New Exemption to Allow Eligible Listed Public Companies to Issue Freely Tradable Securities Without Filing a ProspectusOn September 8, 2022, the Canadian Securities Administrators (CSA) announced a new prospectus exemption aimed at streamlining the process for eligible listed public companies to raise small amounts of…
Financial Services Regulatory
IIROC Issues Guidance on Short Sale Orders and the Reasonable Expectation to Settle Resulting TradesOn August 17, 2022, the Investment Industry Regulatory Organization of Canada (IIROC) issued Notice 22-0130 Guidance on Participant Obligations to have Reasonable Expectation to Settle any Trade…
Class Action Lawsuit Highlights Importance of Legal Wrappers for Decentralized Autonomous OrganizationsIn a first-of-its kind lawsuit filed in the Southern District of California last month, a handful of members of a decentralized autonomous organization (DAO) called bZx DAO (bZx), commenced a class…
Capital MarketsGoodmans LLP acted for NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (“NorthWest” or the “REIT”) in connection with its $150,006,000 supplement dated March 25, 2022 and in…
Capital MarketsGoodmans LLP acted for BSR in connection with its public offering of trust units of the REIT to a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets and CIBC Capital Markets…
Capital MarketsGoodmans LLP acted for Playmaker Capital Inc. (TSX-V: PMKR) (“Playmaker”) in connection with the filing of its final short form base shelf prospectus on April…
NorthWest Healthcare Properties REIT Completes Public Equity Offering for Gross Proceeds of $172,506,900Goodmans LLP acted for NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) ("NorthWest" or the "REIT") in connection with its previously announced public offering (the "Public…
Capital MarketsGoodmans LLP acted for Medicine Man Technologies, Inc., dba Schwazze (OTCQX: SHWZ) (NEO: SHWZ) in connection with their listing of common shares on the NEO Exchange – a tier one Canadian stock…
Capital MarketsGoodmans LLP acted for Sienna Senior Living Inc. (TSX:SIA) (“Sienna” or the “Company”) in the connection with a bought deal offering (the “Offering”) of common shares of the Company (“Common Shares…
News & Events
Capital MarketsGoodmans is pleased to congratulate Emily Ting who has been honoured as one of Lexpert® Rising Stars: Leading Lawyers Under 40 for 2022.Emily Ting is a partner and co-head of a business law group at…
Banking and Financial ServicesWe’re pleased to announce Goodmans was once again named to The Globe and Mail’s Canada’s Best Law Firms list, recognizing the firm as one of the country’s best law firms for 2023.Goodmans was…
Banking and Financial ServicesWe are pleased to announce Goodmans LLP has once again received top tier recognition from The Legal 500 Canada in their 2023 Guide released today. Recognition from The Legal 500 is based on…