Tier 3 comprises companies formerly traded on the Canadian Dealing Network (CDN) that integrated with CDNX in October. To facilitate the transfer of listed companies from CDN to CDNX, the new Tier 3 was created in addition to the Tiers 1 and 2 already in existence.

CDN was an over-the-counter market and as such was not a prescribed stock exchange in Canada under the federal Income Tax Act. As a result, many CDN quoted issuers were classified under Canada’s income tax laws as private corporations or Canadian-controlled private corporations and potentially could qualify for certain private company tax deductions or credits. CDNX worked with the federal Department of Finance to preserve this beneficial tax treatment for former CDN quoted companies that listed on Tier 3 of CDNX.

"To maintain this unique tax treatment, and in recognition of the more modest requirements for listing on Tier 3, CDNX requested that Tier 3 not be a prescribed stock exchange in Canada," said Gerry Romanzin, CDNX Executive Vice-President. "The Department of Finance now supports our request that the prescription of CDNX as a stock exchange apply only to Tiers 1 and 2."

Investors should bear in mind that securities of Tier 3 quoted companies may not qualify as eligible investments for certain purposes of the Federal Income Tax Act. In the absence of issuers having met a number of requirements under the Income Tax Act, the securities of a Tier 3 company may not constitute a qualified investment for registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs) and other types of deferred income plans.

"The RRSP eligibility of securities of these companies depends on the circumstances of each company and the particular investor," said Romanzin. "Investors should speak to their financial advisors to determine the RRSP eligibility of any security trading on Tier 3 of CDNX."

Investors can identify Tier 3 stocks with root symbols beginning with the letter ‘Y’ in the three-letter trading symbol.