Investments glossary

Qualifying Transaction

A qualifying transaction is a transaction where a capital pool company (CPC) acquires significant assets, other than cash, such as a private business or businesses. Significant assets refer to one or more assets or businesses that when acquired result in the CPC meeting the minimum listing requirements of the exchange. A capital pool company is a listed company with experienced directors and capital, but no commercial operations. Essentially, it is a shell company whose sole purpose is to later acquire a privately held company through a qualifying transaction. The directors of the CPC focus on acquiring an emerging privately held company and, upon the completion of the acquisition, that company has access to the capital and the listing prepared by the capital pool company. The private company then becomes a fully-owned subsidiary of the CPC. Qualifying transactions must be completed by a CPC within 24 months after the date of the CPC’s first listing.

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