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PDAC comments on Consultation Paper on Emerging Market Issuers (December 2012) and TSX Venture Exchange Appendix 2B - Listing of Emerging Market Issuers

The PDAC has reviewed the joint Consultation Paper on Emerging Market Issuers (EMIs), as well as the draft TSX Venture Exchange Appendix 2B Listing of Emerging Market Issuers policy.   The PDAC does agree with the view of the TSX and TSX Venture that Management and Corporate Governance are a major source of potential risks associated with listing Emerging Market Issuers.  As described in the background paper, the risks often stem from management’s lack of experience and familiarity with Canadian securities law requirements and stock exchange requirements, including corporate governance standards and practices, requirements associated with related party transactions, and inadequate compliance with continuous and timely disclosure requirements.

However, in our view much of the additional documentation that would be required is an exercise in form over substance and is unlikely to address the potential risks identified by the TMX, while simultaneously raising costs for EMIs.  To specifically address the proposed TSX Venture Appendix 2B, we believe the increased requirements that would be applied to companies that the TSX Venture deems to be Emerging Market Issuers are too broad in scope, overly prescriptive, and expensive for issuers. 

For more details please see our submission Securities - Emerging Market Issuers - PDAC response April 2 2013