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CURRENT ISSUE VOLUME 19 NO. 3 MAY/JUNE 2008
 Money Talks
The road to success may be paved with a capital "P"
By Beste Alpargun
Capital markets match investors looking for appropriate returns with businesses looking for capital. As straightforward as it sounds, this process is not always effective. So the stock exchanges have developed programs that make it easier for the right companies and right investors to connect. Capital Pool Company (CPC) is one of those programs.
Unique to the Canadian market, CPC Program has been creatively providing an alternative to small companies across the country. Here's how it works.
There are several distinct stages. First, businesspeople with public company experience (founders) get together and offer up a money (minimum $100,000) in seed capital. The Capital Pool Company is then formed and shares are issued in exchange for the capital. Now, there is a shell company with experienced management that is looking to invest in new ideas and new ventures.
Second, an intermediary, usually a brokerage company, becomes involved. The CPC decides how much money it needs, files a prospectus with the appropriate securities commissions, and applies for a listing on the TSX Venture Exchange. The brokerage company sells the CPC shares to at least 200 arm's-length shareholders; each one purchases at least 1000 shares. The intent here is to have the CPC's shareholder base as widespread as possible to buffer it from low liquidity.
The above excerpt was taken from the most recent issue of Atlantic Business Magazine. Our complete editorial content is available in print form only. To receive a free subscription to Atlantic Business Magazine,
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