Convertible debenture financing for listed issuers

By Corinne Amrein Published 11 August 2026 Last reviewed 11 August 2026

A convertible debenture is a debt security of a listed company that converts into its shares on agreed terms. In Canada, where the word is standard on the TSX Venture Exchange and the CSE, it is narrower than the compulsorily convertible and non-convertible debentures that dominate Indian search results: privately placed, priced against the market at closing, and restricted on resale for four months.

Key takeaways

The conversion price is fixed, not floating. A TSXV conversion price is set against a price reserved with the Exchange and subject to its minimum pricing requirements; changing it later needs Exchange acceptance.
The Listed Issuer Financing Exemption does not cover debentures. Part 5A of NI 45-106 reaches listed equity securities and units of a share and a warrant, and nothing else.
The hold period runs from the debenture, not from conversion. Under NI 45-102 the restricted period for the underlying shares is measured from the date the convertible security was distributed.
The LIFE dollar limits moved in 2025 and sit in a time-limited blanket order. Confirm it is still in force before planning a raise around the higher figures.

Why the word points to Canada

Debenture is a general word for unsecured corporate debt, and in India it carries most of the search volume: non-convertible debentures, which never convert, and compulsorily convertible debentures, which must. Neither is what a venture-market CFO means. On the TSXV and the CSE a convertible debenture is a privately placed instrument, convertible at the holder's election into listed shares, and shaped by the exchange rulebook.

The same economics arrive in a different wrapper on each side of the border. A US issuer signs a convertible note and negotiates the conversion formula; a Canadian issuer signs a debenture and negotiates around a price the Exchange has accepted.

Pricing: the reservation, not the formula

Under Policy 4.1 of the TSXV Corporate Finance Manual, a private placement is priced by reserving a price with the Exchange, and the conversion price of a convertible security is fixed against that reservation and subject to the Exchange's minimum pricing requirements. Any later amendment to the conversion price or period requires Exchange acceptance, and interest settled in shares is priced and accepted separately.

The consequence is worth stating plainly: on a TSXV debenture there is no discount to a trailing volume-weighted average price, no reset and no floor to negotiate, because the conversion price may not float. The negotiation moves to term, interest, security, warrant coverage and tranche size. Confirm the current minimum pricing figures against the Manual before you price.

Where the Listed Issuer Financing Exemption stops

The Listed Issuer Financing Exemption in Part 5A of NI 45-106 lets a qualifying reporting issuer raise capital off its continuous-disclosure record, using a short offering document on Form 45-106F19 instead of a prospectus, and issue securities that are freely tradeable on closing.

It does not reach a convertible debenture. Part 5A permits listed equity securities, or units of a listed equity security and a warrant to acquire one; subscription receipts, special warrants and convertible debentures sit outside it. A debenture therefore goes out under another prospectus exemption, and the four-month hold comes back with it. Issuers who want both run concurrent tranches: a LIFE equity tranche that is free trading on closing, and an exempt debenture tranche that is not.

The limits also moved. Part 5A's base limit is the greater of C$5 million and 10% of market capitalisation, capped at C$10 million in any 12-month period. Coordinated Blanket Order 45-935, in force from 15 May 2025, substitutes the greater of C$25 million and 20% of the aggregate market value of the listed securities, capped at C$50 million, and retains a 50% dilution limit. That relief is a blanket order with a term, not a permanent rule change, so check it still applies in your jurisdiction.

Hold periods and when the shares can be sold

Securities issued under most Canadian prospectus exemptions carry a restricted period under NI 45-102: at least 4 months and a day from the distribution date, with a legend to match. For shares issued on conversion the distribution date is the date the debenture was distributed, so a debenture held past the restricted period converts into shares that can be sold on issue. If the issuer also has a US listing, the position under Rule 144 is a separate analysis.

Debenture or note: choosing the wrapper

Canadian convertible debenture compared with a US convertible note
Feature	Convertible debenture (TSXV or CSE)	Convertible note (US listed)
Conversion price	Fixed against an exchange price reservation	Fixed or referenced to traded prices
Regulatory gate before closing	Exchange acceptance of the placement	Capacity test; approval only if breached
Resale restriction	Statutory hold from the distribution date	Restricted until registration or Rule 144
Route to a tradable share	Expiry of the hold; no filing	Registration statement, or Rule 144
Later amendments	Exchange acceptance required	Contractual, with disclosure
Structural comparison only. Not an offer, a quote, or a rate card.

General information, not legal advice. Exemption conditions, exchange pricing rules and hold periods change, and Blanket Order 45-935 is time limited. Verify the position with qualified securities counsel in the relevant jurisdiction before agreeing terms.

For the wider Canadian picture see financing Canadian listed issuers. For the decision itself, read the convertible debt decision, or tell us the exchange, the float and the amount.

Convertible debentures: frequently asked questions

Is a convertible debenture the same as an Indian NCD or CCD?

No, and most search results for the phrase are about the Indian instruments. A non-convertible debenture never converts, and a compulsorily convertible debenture must. The instrument described here is the North American venture-market one: privately placed, convertible at the holder's election, and issued off an exchange-accepted price reservation.

Can a Canadian issuer use the Listed Issuer Financing Exemption for a convertible debenture?

No. Part 5A of NI 45-106 permits listed equity securities, or units made up of a listed equity security and a warrant. Convertible debentures, subscription receipts and special warrants fall outside it, so a debenture goes out under another prospectus exemption and carries the four-month hold.

How much can a listed issuer raise under the Listed Issuer Financing Exemption?

Part 5A sets a base limit of the greater of C$5 million and 10% of market capitalisation, capped at C$10 million in any 12-month period. Coordinated Blanket Order 45-935, in force from 15 May 2025, substitutes the greater of C$25 million and 20% of the aggregate market value of the listed securities, capped at C$50 million. The order is time limited.

When can shares issued on conversion of a Canadian debenture be sold?

Once the restricted period under NI 45-102 has elapsed. It is measured from the date the debenture itself was distributed, not from the date of conversion, so a debenture held for more than four months can produce shares that are saleable on issue. The position carries a legend until then.

Can the conversion price float with the market on the TSXV?

No. Under Policy 4.1 of the TSXV Corporate Finance Manual the conversion price of a convertible security is fixed against a price reserved with the Exchange and subject to its minimum pricing requirements, and any later amendment needs Exchange acceptance. A discount-to-VWAP conversion of the United States kind is not available.