Conditional Listing Application (CLA)

What is a Conditional Listing Application (CLA)?

A conditional listing application (CLA) is an interim step in the listing process for a company that seeks to be listed on the Toronto Stock Exchange (TSX).

Key Takeaways

  • A conditional listing application refers to a step a company must fulfill prior to listing on the Toronto Stock Exchange (TSX).
  • It is the next to last step prior to full listing approval on the TSX. 

How a Conditional Listing Application (CLA) Works

The conditional listing application refers to the combination of the TSX listing agreement and the company's prospectus. It is the next to last step prior to full listing approval. Upon approval of the application for a TSX listing by the exchange's listing committee, the company's legal counsel is provided with a letter of conditional approval. This letter outlines any outstanding filing requirements and the final listing fee payable by the company.

Established in 1852 and owned and operated as a subsidiary of the TMX Group, the Toronto Stock Exchange (TSX) is the most significant stock exchange in Canada. Until 2001, the Toronto Stock Exchange was known as the TSE.

Canadian exchanges have traditionally been home to the securities of many natural resource and finance companies. The TSX is the third-largest stock exchange in North America by capitalization, after the New York Stock Exchange (NYSE) and the Nasdaq. In 2009, the TSX merged with the Montreal Stock Exchange (Bourse de Montreal). To reflect ownership of both exchanges, the parent company, TSX Group, became TMX Group.

The S&P/TSX Composite Index tracks the value of the 60 largest stocks on the TSX. Among the largest stocks listed on the TSX are Suncor Energy, TC Energy, the Royal Bank of Canada, Shopify, Thomson Reuters, and Canadian National. More than 2,000 small- and mid-cap companies are listed on the TSX Venture Exchange, known as the TSX-V.

Methods of Listing on TSX

An initial public offering (IPO) requires completion of an application for listing and filing a prospectus with the applicable Canadian securities commissions. A reverse takeover or reverse merger allows a private company to vend into a TSX- or TSXV-listed company or shell.

The special purpose acquisition corporation (SPAC) program offers an alternative vehicle for listing on TSX. Unlike a traditional IPO, the SPAC program enables experienced directors and officers to form a corporation that contains no commercial operations or assets other than cash. The SPAC is next listed on TSX via an IPO, raising a minimum of $30 million. Then, 90 percent of the funds raised are placed in escrow, and must then be used toward the acquisition of an operating company or assets within 36 months of listing, defined as a qualifying acquisition.

Article Sources
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  1. City of Toronto. "Toronto Stock Exchange." Accessed Dec. 11, 2020.

  2. Statista. "Largest Stock Exchange Operators Worldwide as of Mar 2020, by Market Capitalization of Listed Companies." Accessed Dec. 11, 2020.

  3. Government of Canada. "Merger of TSX Group Inc. and Bourse de Montréal Inc." Accessed Dec. 11, 2020.

  4. Toronto Stock Exchange. "Special Purpose Acquisition Corporation (SPAC)." Accessed Dec. 11, 2020.

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