The Capital Pool Company Program ("CPC Program") seminar taking place in Ottawa on Tuesday, Sept. 23 at the Holiday Inn Selects is designed for entrepreneurs and investors in mind. This intensive knowledge exchange will have a panel of local experts share their knowledge, insight, and offer insider advice on how to maximize a company's growth potential through public financing. Below is information about the CPC Program and the upcoming seminar.

ABOUT THE CPC PROGRAM

The Capital Pool Company Program ("CPC Program") is a unique corporate finance tool for emerging companies offered by the TSX Venture Exchange ("TSX-V"). This article will provide a brief overview of how the CPC Program pairs a private company with a public Capital Pool Company ("CPC") that ultimately becomes the listing vehicle for taking the private company public. The CPC Program provides up-and-coming private companies with access to capital market financing, shareholder liquidity, an enhanced image, and relief from most if not all of the expenses of the going public process. The CPC Program also looks for seasoned management who wish to partner with a pre-IPO company, and provides private placement opportunities for experienced investors.

The CPC Program essentially divides the traditional IPO process into two stages.

The first stage consists of the creation of the CPC. It begins with three to six founders incorporating a shell company, the CPC, and investing a minimum of $100,000 in return for "seed shares" in the CPC. The minimum price for the seed shares is the greater between $0.05 and 50 per cent of the price at which the subsequent initial public offering shares are to be sold. The CPC then prepares a prospectus outlining management's intention to raise between $200,000 and $1.9 million in its initial public offering. The shares are typically sold at twice the issuance price of the seed shares, and the proceeds are used to identify and evaluate potential private company acquisitions. To sell the shares, the CPC must file its prospectus with the appropriate securities commission, as well as submit an application for listing on the TSX Venture Exchange. A designated broker then sells the shares to at least 200 arms-length shareholders, each of which must buy a minimum of 1,000 shares but no more than two per cent of the offering or four per cent for a shareholder and his or her affiliates. Once the distribution has been completed and closed, the CPC is listed for trading on the TSX Venture.

The second stage involves the actual acquisition of the targeted asset and is known as the "qualifying transaction." At this stage, the CPC must identify an appropriate business as its qualifying transaction and issue a news release announcing an agreement to acquire that business. A draft information circular or filing statement is then prepared by the CPC and received by the TSX Venture to ensure it meets the minimum listing requirements. Where shareholder approval is required, the information circular is mailed to the shareholders of the CPC who then vote at a shareholder's meeting on whether to approve the qualifying transaction. Once shareholder approval is obtained, the qualifying transaction closes and the business is acquired. In the instance where shareholder approval is not required, the filing statement is posted on SEDAR for at least seven business days, after which the qualifying transaction closes and the business is acquired.

In terms of benefits, the CPC Program has several. The CPC Program is less risky, quicker and perhaps provides more economical access than the traditional IPO route. This is an attractive feature for emerging private companies, which may be fearful of going public due to the steep costs, both in terms of time and money. The CPC route also provides greater liquidity of the securities of the resulting issuer following completion of the qualifying transaction. Another salient difference is the CPC Program provides a wide base of retail shareholders, whereas the IPO route will typically result in a heavy concentration of institutional shareholders. Further, listing on a public market such as the Venture Exchange boasts an element of prestige and visibility.

By Sean Caulfeild

If you would like to learn more about the CPC program, the TSX Venture Exchange, or Perley-Robertson, Hill & McDougall LLP, please contact Sean at scaulfeild@perlaw.ca or call 613-566-2821.

ABOUT THE CPC PROGRAM SEMINAR

Who Should Attend: Owners and managers of emerging companies, investors who want a more liquid market in which to trade their shares, and seasoned management who wish to partner with a pre-IPO company.

What Participants Will Gain: A solid understanding of the TSX Venture's Capital Pool Company Program and its flexible approach to raising public venture capital.

Date: Tuesday, September 23, 2008

Time: 4:30pm - 7:00pm

Location: Holiday Inn Select and Suites, 101 Kanata Ave.

Cost: $30/person

If you would like to learn more about the CPC Program Seminar, contact Denisa Horak at dhorak@perlaw.ca or 613-566-2856.

To read more Business Matter articles from Perley-Robertson, Hill & McDougall LLP, click on

http://www.ottawabusinessjournal.com/businessmatters6.php.