May 30, 2016
According to a recent article in the Financial Post by Drew Hasselback, the number of publicly listed companies in Canada has dropped 17% since 2007. In an effort to determine the reason behind this steady decline, Hasselback consults a number of market experts, including Jeremy Fraiberg, Osler partner and co-chair of the firm’s Mergers and Acquisitions Group. The experts agree that there is no single cause for the drop, and point instead to a mix of market conditions, such as the cost of regulatory compliance for public companies – particularly, says Jeremy, for Canadian corporations with dual U.S.-Canadian stock listings or cross-border activities.
“The cost burdens have increased over time,” Jeremy explains in the article. “Since Sarbanes-Oxley and so forth, there have been increased controls on public companies. That may be a good thing ultimately, but when you increase the cost of something, there may be a corresponding decrease in demand. It’s economics.”
A business law professor from the University of Calgary believes the situation should be a cause for concern for Canadian securities regulators who, he suggests, focus too much on corporate governance issues and not enough on uncovering the reasons why fewer and fewer companies are choosing to go public. He warns that they’re guiding a ship that’s “taking on water quickly.”
Read Drew Hasselback’s full article The amazing disappearance of the Canadian Public Company in the May 30, 2016 edition of the Financial Post.