New “Major Acquisition” Rule Adopted by CSE
On October 2, 2025, the Canadian Securities Exchange (CSE) confirmed the adoption of certain amendments to its listing policies. A significant change is the redefinition of “Major Acquisition” together with the introduction of a formal approval process for such transaction that is separate from the process applicable to a “Fundamental Change” (all capitalized terms as defined in the CSE policies).
The Redefined “Major Acquisition”
Under the new policy, a “Major Acquisition” is redefined as an asset purchase, takeover, amalgamation, or merger — whether for cash or securities — where, as a result of the transaction, at least 50% of the Listed Issuer’s:
(a) assets or resources are expected to be comprised of,
(b) anticipated revenues are expected to be derived from, or
(c) expenditures and management time and effort will be devoted to
the assets, properties, businesses, or other interests acquired in the transaction for the next 12-month period.
The above definition introduces a material threshold and focuses on the forward-looking operational impact of the transaction for the Listed Issuer.
Anticipated Impact of this Change
The CSE will likely play a more important role in transformative transactions similar to regulatory practices seen on other exchanges such as the TSX Venture Exchange. The newly introduced approval requirement proposes to limit the issuance of shares as consideration for assets without a evidence of the value of those underlying assets and could result in additional changes to the structure of, or the conditions on, the transaction. It would also require the Listed Issuer to seek CSE’s guidance through the review process which may result in a longer period between the announcement and closing of transaction. Ultimately, the CSE may require the transaction to be submitted to shareholder approval if the Listed Issuer is not able to provide sufficient evidence supporting the deemed value of the underlying assets.
To learn more about this new CSE rule or obligations of a company listed on the CSE, please reach out to Momentum Law LLP at +1 (416) 594-0791 or email us at info@momentumlaw.ca.
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