The NEX Board
NEX is a separate board of the TSX Venture Exchange, which serves as a trading forum for companies that have fallen below the listing standards of the TSX Venture Exchange. This platform is meant for companies that have low levels of business activity or do not carry on active business at all.
Types of Issuers on the NEX Board
NEX provides a trading forum for the following types of issuers:
- Issuers that have been listed on the TSX Venture Exchange but no longer meet its Maintenance Requirements (currently known as Inactive Issuers).
- Capital Pool Companies (CPCs) that have failed to complete a Qualifying Transaction (QT) in accordance with the requirements of the exchange.
- TSX issuers that no longer meet the continued listing requirements, and would have been eligible for listing on TSX Venture as Inactive Issuers under existing policies.
Advantages of the NEX Board
- Liquidity: Provides a trading venue for companies, ensuring liquidity for existing shareholders.
- Cost-effective: More affordable compared to standard listing requirements, helpful for companies in transition.
- Reputation Management: Maintains the company’s visibility and can enhance its reputation even while it reorganizes or regains eligibility for standard exchanges.
Frequently Asked Questions (FAQs)
Q: What kind of companies typically list on the NEX Board?
A: Typically, companies with low levels of business activity or that do not carry on active business. Examples include Inactive Issuers and CPCs that fail to complete a QT.
Q: How can a company move from the NEX Board back to the TSX Venture Exchange?
A: The company needs to meet the TSX Venture Exchange’s Maintenance Requirements again to re-qualify for listing.
Q: What are the benefits for shareholders if a company is listed on the NEX Board?
A: The company maintains a level of liquidity and visibility, benefiting shareholders by giving them the opportunity to trade shares while the company lays the groundwork to meet higher listing standards.
Key Takeaways
- NEX Board: A platform for companies that do not meet TSX Venture Exchange’s listing standards.
- Types of Issuers: Inactive Issuers, CPCs failing to complete a QT, and downgraded TSX issuers.
- Advantages: Provides liquidity, cost-effectiveness, and reputation management for companies in transition.
Glossary
- TSX Venture Exchange: A stock exchange in Canada that serves small to medium-sized venture companies.
- NEX Board: A segment of the TSX Venture Exchange for trading companies that do not meet the regular listing standards.
- Inactive Issuer: A company formerly listed on TSX Venture but has fallen below maintenance requirements.
- Capital Pool Company (CPC): A listed company with no commercial operations that uses its funds to negotiate an acquisition of an operating company as its QT.
- Qualifying Transaction (QT): An acquisition made by a CPC that meets the TSX Venture Exchange requirements for a standard listing.
Appendix: Example Chart for Issuer Classification
graph LR
A[Company Listing Path] --> B[TSX Venture Exchange]
A --> C[NEX Board]
B --> D[Meets Requirements]
C --> E[Inactive Issuers]
E --> F[CPCs Failing QT]
E --> G[Downgraded TSX Issuers]
Figure: Example of classification and transition paths for listed companies.
Next Steps
- Reassess Business Plans: Companies on the NEX Board may need to reevaluate and reorganize their business plans to meet standard listing requirements.
- Utilize Trading Benefits: Shareholders should understand the liquidity and potential advantages of the NEX Board during company transitions.
Finally, understanding the functions and advantages of the NEX Board can aid investors in making informed decisions. This utility serves both companies trying to reorganize and shareholders looking to manage their investments effectively.
📚✨ Quiz Time! ✨📚
## What is the purpose of the NEX board in the TSX Venture Exchange?
- [ ] To list newly launched companies with high activity levels
- [x] To provide a trading forum for companies below TSX Venture Exchange’s listing standards
- [ ] To allow for high-frequency trading of blue-chip stocks
- [ ] To facilitate the trading of IPOs exclusively
> **Explanation:** The NEX board is a part of the TSX Venture Exchange designed to offer a trading platform for companies that no longer meet the listing standards of the TSX Venture Exchange, often due to low levels of business activity or inactivity.
## Which of the following types of issuers can trade on the NEX board?
- [ ] Only companies with active business operations
- [x] Issuers that no longer meet the TSX Venture Exchange Maintenance Requirements
- [ ] Companies that are newly listed on the TSX Venture Exchange
- [ ] Companies with high trading volumes
> **Explanation:** NEX provides a trading forum primarily for issuers that have been delisted from the TSX Venture Exchange due to not meeting the maintenance requirements or being inactive.
## The NEX board includes which of the following types of companies?
- [ ] Large-cap, established firms with active trading
- [ ] Only new companies seeking initial public offering (IPO)
- [x] Companies with low levels of business activity or inactive companies
- [ ] Companies that specialize in crowdfunding
> **Explanation:** The NEX board is set up for companies that have fallen below the listing standards of the TSX Venture Exchange, usually due to low or zero business activity.
## Can CPCs that fail to complete a QT in accordance with exchange requirements trade on the NEX board?
- [ ] No, they are delisted permanently
- [x] Yes, they can trade on the NEX board
- [ ] Yes, but only if they re-apply for listing
- [ ] They must merge with another company to trade
> **Explanation:** CPCs that fail to complete a Qualifying Transaction (QT) in alignment with exchange requirements are eligible to trade on the NEX board.
## What sets the NEX board apart from the main TSX Venture Exchange?
- [ ] It lists foreign companies exclusively
- [ ] It focuses solely on companies in the technology sector
- [ ] It allows only institutional investors
- [x] It provides a platform for companies that do not meet the listing standards of the main TSX Venture Exchange
> **Explanation:** The NEX board is distinct in that it serves as a trading platform for companies that do not meet the ongoing listing requirements of the main TSX Venture Exchange.
## Which type of issuer listed on the NEX board must comply with the requirements set by the exchange for CPCs?
- [ ] Inactive blue-chip companies
- [ ] Technology start-ups
- [x] CPCs that fail to complete a QT
- [ ] Penny stocks
> **Explanation:** CPCs that fail to complete a QT (Qualifying Transaction) in accordance with the requirements of the exchange are one of the categories of issuers that can be listed on the NEX board.
## Which of the following statements is TRUE about NEX?
- [ ] It is for companies actively traded on the main TSX
- [x] It lists companies that do not meet TSX Venture Exchange maintenance requirements
- [ ] It exclusively lists companies that have just completed IPOs
- [ ] It lists highly active trading companies
> **Explanation:** NEX is specifically for companies that do not meet the maintenance requirements of the TSX Venture Exchange and thus can still trade in a supervised environment.
## Which board of the TSX Venture Exchange provides a trading platform for companies that have fallen below the exchange’s listing standards?
- [ ] Main Board
- [x] NEX Board
- [ ] Growth Board
- [ ] Technology Board
> **Explanation:** The NEX Board of the TSX Venture Exchange is intended for companies that do not meet the listing standards of the main exchange, providing them a place to continue trading.
## What does "inactive issuer" refer to on the NEX board?
- [ ] A company actively traded on a different exchange
- [ ] A new company waiting for listing
- [ ] A company with high trading volumes
- [x] A company that no longer meets the TSX Venture Exchange Maintenance Requirements
> **Explanation:** An inactive issuer is a company that has been delisted from the TSX Venture Exchange because it no longer meets the maintenance requirements but continues to trade on the NEX board.
## Why would a TSX issuer be moved to the NEX board?
- [ ] Due to high market capitalization
- [ ] For conducting illegal activities
- [ ] Because of high levels of business activity
- [x] For not meeting continued listing requirements on the TSX
> **Explanation:** A TSX issuer would be moved to the NEX board if it no longer meets the continued listing requirements of the TSX, making it eligible to trade on the NEX as an inactive issuer.