The United States Securities and Exchange Commission (SEC) recently adopted a series of rules relaxing the restrictions imposed on public offerings. The largest public companies - defined as “well-known seasoned issuers” (WKSIs) - received the most extensive regulatory relief. Canada could adopt a version of WKSI status for the top tier of Toronto Stock Exchange (TSX) issuers as part of a streamlined POP system.
Careful consideration must be given, however, as to the appropriate standards for WKSI status in Canada. The standards adopted in the U.S. – US$700 million in market capitalization or US$1 billion in nonconvertible debt issued over the prior three years – might not be appropriate for the Canadian market, where issuers tend to be smaller. While the U.S. WKSI standards bring 30% of listed issuers within the WKSI category, applying the same standards in the Canadian context would only bring regulatory relief to 17% of Canadian companies listed on the TSX, and only 7% of the total companies listed on the TSX and TSX Venture exchanges.
This study analyzes the effect of extending WKSI status to the top 30% of TSX issuers. Broadening the WKSI category in this fashion would reduce the market capitalization cutoff to approximately $330 million and bring in an additional 185 companies. Moreover, it would mean that WKSI status would cover companies representing 93% of Canada’s total market capitalization.
Pritchard, Adam C. "Well-Known Seasoned Issuers in Canada." In Maintaining a Competitive Capital Market in Canada, 1-32. Canada Steps Up, vol. 5. Toronto: Task Force to Modernize Securities Legislation in Canada, 2006.