Capital Pool Company (TSX Venture)

Just the people you want to call if you want to go swimming in Washington DC. Also, a thing related to Canadian investing.

A capital pool company is a particular type of investment vehicle present on Canadian markets. It's an alternative way to raise capital rather than listing directly on the main exchange.

Here's the process:

First, you form the capital pooling company, or CPC. That involves getting at least two of your friends involved (you need three individuals total). Between the three of you, you have to contribute either $100,000 (Canadian dollars), or 5% of the total amount eventually raised, whichever is more. Then you incorporate the company and issue shares.

Second, you go through a regulatory review and (assuming you pass) some additional preparatory rigmarole. Eventually, the CPC gets listed on the TSX Venture Exchange, which is like the little brother to the Toronto Stock Exchange (the big boy of Canadian equity trading).

La Grande Hoseur.

Related or Semi-related Video

Finance: What is a Blank Check Company?14 Views

00:00

Finance, a la shmoop. What is a blank check company? All right well when Russia

00:07

was the big bad USSR in the Cold War of the 70s there was a secrecy about everything [The USSR shown on the map]

00:11

that they did as they expanded their territory, [Formation of tanks driving]

00:14

oh wait that's a blank Czech company a little different... All right a blank check

00:19

company yeah you knew we were gonna do that come on, well it's actually an

00:22

investment vehicle that in practice well isn't that far off the Russian flavor of [Definition of a blank check company written on a 100 dollar bill]

00:28

things. Specifically a blank check company isn't specific, see what we did there...

00:34

Hence the word blank in there, think of it as the operating version of a venture capital

00:39

partnership or of a private equity growth capital company thing.. yeah it's one of

00:44

those. There's no specific game plan or structure other than to just go make [Football players talking to their coach]

00:49

money from shareholders. Well the dough in this kind of

00:51

investment vehicle is generally viewed as weaponry to acquire companies. [Pile of money attacks the company]

00:56

Usually speculative dead dying or otherwise extremely cheap companies

01:01

think penny stocks delisted from Nasdaq zombies with the view that the operators [Zombie]

01:06

of the blank cheque company can take over the company, run it better, improve

01:10

profit margins and regenerate growth. Well one type of blank cheque company is

01:15

called SPAC, stands for special purpose acquisition corporation. [The meaning of the letters is shown]

01:20

Which might have a sole directive of rolling up or consolidating a niche

01:24

industry like yes of course the whoopee cushion industry, where if there exists [Whoopee cushion industry]

01:29

the Minkleman family and the Snookerdoodle family they're kind of the Coke

01:33

and Pepsi of whoopee cushions, and if they merged well then they would have a [The two families with Coke and Pepsi logos over their heads]

01:37

virtual monopoly over whoopee cushions. They could raise prices and profit [The two families come together and a monopoly logo appears]

01:42

margins would soar with cheaper rubber supplies and they'd go from being worth 1

01:46

whoopie to being worth several yeah that'll put some wind in your cushion... [Several whoopee cushions appearing]

01:51

That's a blank check company go buy stuff raise price. [Pair of kids prank a mum with a whoopee cushion]

Find other enlightening terms in Shmoop Finance Genius Bar(f)