Reverse takeover

Reverse takeover - Canada

Reverse takeover is transaction in which public company listed on a stock exchange in Canada with few or without assets (often referred as shell company) acquires all securities of a private company with a significant assets and operation. It is considered a less expensive and time consuming alternative to initial public offering (IPO). This way public companies acquires all securities of public company and it becomes direct or indirect wholly-owned subsidiary. Shareholders of the private company receive shares from the public company and the operating company's shareholders ultimately acquire a controlling interest in the new, combined company.

Shell companies may be created and maintained just for purpose of reverse takeover or it can be existing company, a reporting issuer that have previously ceased operations, but still maintain their reporting issuer status and usually have the shareholders required to list on a stock exchange. This makes them ideal candidates to complete an RTO transaction to take a private company public. The choice of structure used to implement an RTO transaction will depend on number of factors:the business sector in which the private company operates, legal and tax consideration, the number of shareholder and their location, deal process and timing matters. An reverse takeover transaction generally includes negotiations and discussions among parties, due diligence, shareholders meeting, preparation of disclosure documents containing-prospectus level disclosure concerning each of the companies and prescribed financial statement, review of and changes to corporate governance governance structures and policies to ensure that securities law and stock exchange requirements are met, review of transactions and related disclosure documents. Securities held by officers, directors and other insiders will be subject to the escrow policies of the relevant stock exchange.

If you are interested in going public and you currently meet NEO's or CSE's requirements or will meet them following a public offering, we encourage you to contact us and we can assist in completing the listing application form. The listing application and the required due diligence can be done concurrently during the process of become a reporting issuer in Canada.

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