What Is an Advanced Company (TSX Venture)?
An advanced company is a public corporation listed on Canada's TSX Venture Exchange that satisfies the exchange's Tier One listing standards.
The TSX Venture Exchange primarily lists emerging young companies seeking venture capital. Advanced or Tier One companies have significant financial assets and directors with proven reputations. Tier Two companies are primarily early-stage or junior companies.
- An advanced or Tier One company on the TSX Venture Exchange indicates a better-established and well-financed company.
- Tier Two companies are early-stage startups.
- The TSX Venture Exchange is focused on new and emerging companies seeking capital for development and expansion.
Tier One companies have access to a more favorable regulatory environment, decreased filing requirements, and increased access to institutional investors. The companies represent many specializations and can be found in mining, oil and gas, mixed industry, technology, life sciences, real estate, and investment.
Among the best-performing Tier One companies in the 2020 TSX Venture Top 50 are dynaCERT Inc., Well Health Technologies, PetroTal Corp., BTU Metals Corp., and Score Media and Gaming Inc.
Understanding an Advanced Company
An advanced company listed on the TSX Venture Exchange must be approved for Tier One status by the exchange’s listing committee. The approval process includes an investigation of the reputation and past conduct of the company’s directors, officers, and stockholders. TSW also reviews the distribution and capital structure of the company’s stock.
Most Tier One companies must hold at least $5 million in net tangible assets to be listed. Investment companies must maintain at least $10 million in assets.
Tier One vs. Tier Two
All Tier One companies must have enough cash on hand to achieve their stated business plan for 18 months following the listing. When a company has been approved to list with Tier One status, it must issue a free trading public float of at least one million shares, each with an initial public offering (IPO) value of at least $0.10 Canadian. At least 20% of the total shares of the company must be held by at least 250 individuals.
Tier Two companies need only $2 million of net tangible assets and an initial public trading float of 500,000 shares to be listed on the exchange.
When companies apply for listing on TSX Venture, they must specify whether they plan to list as Tier One or Tier Two companies. However, the designation is ultimately at the discretion of the listing committee.
Example of an Advanced Company
Hempco Food and Fiber (HEMP) is an example of a company that moved from Tier Two to Tier One. When the company graduated to Tier One status in December of 2017, CEO Diane Jang stated that it was “a reflection of the strong positive development we have gone through as a company…While Tier One status comes with certain benefits, it is the strong positive signal graduation provides to current and potential shareholders that is the most important outcome.”
Among other benefits, graduation to Tier One status allowed Hempco to release more than 14 million shares from escrow, making them available for trading on the exchange.