Most Likely Outcome of Ongoing Discussions Between Aph & TSXAphria's press release issued earlier today stated Aph and TSX met ..."on Friday October 20, 2017 to discuss the Exchange's recent guidance on Section 306, Section 325 and Part VII of the TSX Company Manual. Aphria is pleased that TSX representatives responded positively to its proactive efforts to work with the Exchange in light of this recent guidance."
The following isn't for everyone, but those who are so inclined and care to read the above sections can click on the following link which will take you to the TSX Manual. I've hi-lighted parts of the relevant sections below.
The sections are s. 306, s. 325 and Part VII.
TSX Company Manual
In my opinion, there is definitely an argument to be made that Aphria should be Grandfathered in.
The TSX reserves the discretion to make any decsion and the exchange will take into consideration the "requirements of other regulatory agencies". Not to beat a dead horse, but we already know every single other regulatory body in the country including CSA, OSC and CSE are in favour of "enhanced disclosure" as being the standard for doing business in the USA.
Do not let the noise of Fed vs State law cloud the issue. It is a non issue. If it were an issue, there is no way the CSA would have allowed the CSE to operate on the basis of "enhanced disclosure".
The Regualtors had the option of prohibiting all Exchanges in Canada from allowing issuers to carry on business in the U.S, however "they chose not to". Instead, Regualtors allowed each exchange to establish their own policy. CSE went one way the TMX went the other.
Unlike the CSE, the TSX came under criticism in the summer because they applied different standards to competing companies wanting to do business in the US. The CSE was always consistent in their approach.
S.306
.......The criteria have been designed as guidelines, and the Exchange reserves the right to exercise its discretion in applying them. This discretion may well take into consideration facts or situations unique to a particular applicant, resulting in the granting or denial of a listing application notwithstanding the published criteria. The Exchange will also take into consideration an applicant's status regarding compliance with the requirements of other regulatory agencies........
S.325
.....The Exchange reserves the right to exercise discretion in considering all factors related to the management of a company in order to determine the acceptability of that company for original listing and thereafter for continued listing. The Exchange's discretion will be exercised at all times in a manner, which is reasonable and consistent with regulatory and statutory requirements.
Without in any way limiting the generality of the foregoing, the Exchange, in pursuit of its goal of public protection and to promote integrity and honesty in the capital markets:
1. shall require that any document submitted to the Exchange constitutes full, true and plain disclosure; and
.....
The above dialogue is not intended to be a complete analysis of all the issues between the TMX and Aph. However, it does provide some insight into what is being discussed.
I would like to remind everyone that we are not privy to all the facts and the written documents each party will be relying on. However, from what little we know and the sections that apply, and the totality of all the public statements made by the parties involved, it is highly unlikely that delisting is an option.
There are other alternatives.
At this stage, it is all about "optics". The TSX wants to be percieved that they are in control.
Based on what we know, Grandfathering Aphria in, and allowing them to remain listed on the TSX while mainting their ownership in LHS is definitely an option being considered by the TSX.
Nothing wrong or improper with Grandfathring Aphria in. That is what "first mover advantage" is all about. Pouncing on an opportunity before your competitors.
All the TMX has to do is "exercise its "discretion" in a manner, which is reasonable and consistent with "regulatory" and stautory requirements. If you have been paying attention you know what those regulatory requirements are.
If I were Bruce I would be picking up the phone tomorrow and calling Vic to see how I could help with the TMX discussions. Maybe with a bit of support from the industry the TMX opens the doors for all LPs wanting to enter the U.S. market. Wait, forgot, even if the doors were opened, Bruce does not want the exposer of doing business in the US.
Maybe its time those companies that were treated unfairly in the summer and were so vocal in the media about it, step up to the plate and lobby the TSX to reverse their policy. If they don't, they run the risk that Aphria gets grandfathered in while they continue to watch from the sidelines.
The timing is right for Canadian LPs to become dominate North American leaders in an emerging growth industry. If we wait 3 or 4 years it is going to be too late. Despite their uncertainty in the summer, I strongly believe the TSX will not put the breaks on commerce.
I for one am willing to see Aphria dominate the North American while Canopy dominates Europe. "That is a trade off I will take any day".
M