Amid increasing economic uncertainty, and stratospheric valuations in parts of the market, many investors are again gravitating toward businesses with stable cash flow, tangible assets and services the economy cannot function without. In theory, that should be good news for Canada. Our markets are home to many companies in foundational sectors such as infrastructure, industrial services, heavy equipment, transportation and the natural resource sectors.
But Canadian public markets are making it too hard for those businesses to grow.
That is not just a problem for public issuers. It is a problem for investors and for the long-term competitiveness of the Canadian economy.
Canada will never match the U.S. on market size, listing volume or depth of available capital. Our advantage should be speed, efficiency and a reputation for enabling credible, cash-flow positive businesses to raise capital and scale. Too often, we offer the opposite.
For growth-oriented companies, time matters. Every day that is consumed by regulatory process is one not spent evaluating acquisitions, meeting investors, hiring talent or executing strategy. Delay is not a neutral administrative burden. It is a real obstacle to capital formation.
We need to be more honest about this. Strong oversight is essential. Investor protection matters. But when a system becomes too slow, too rigid or too focused on procedure, it can end up discouraging exactly the kinds of businesses our public markets should want to attract.
That is especially true for mature, asset-backed businesses operating in the real economy. Early-stage or pre-revenue companies often fit more neatly into the structure and expectations of public markets. But for a cash-flowing, growth-oriented company in industrial distribution, infrastructure services or heavy equipment, the path can be disproportionately burdensome relative to the benefit.
That should concern not only investors, but Canadians in general. These are exactly the kinds of businesses many investors want more exposure to in a volatile environment: durable companies with real assets, lower obsolescence risk and essential service offerings.
Predictability has value. Canada has a natural advantage in these real-economy sectors, yet if our public markets remain too cumbersome, more of these businesses will stay private, go private or seek capital elsewhere, as has been commonplace for the last decade.
That means fewer opportunities for Canadians to invest in the businesses that build, maintain and move the country.
Smarter regulation
The answer is not weaker regulation. It is smarter regulation.
A good place to start would be broader adoption of semi-annual reporting for appropriate issuers. Management teams should be spending more time building businesses and engaging investors, and less time preparing for the next filing cycle.
The Canadian Securities Administrators’ pilot project allowing semi-annual reporting for certain issuers is a constructive first step, but it should be part of a broader rethink of whether our framework is helping our economy grow.
We also need clearer service standards around regulatory timing. A first prospectus review should come back in days, not weeks. And there should be an expedited path for companies with real assets, revenues, employees and established operations. A proven operating business should not be treated like a speculative platform.
If we do not catch up to our competitors, the outcome is predictable. More good Canadian companies will be sold to foreign buyers. More entrepreneurs will conclude that building here is harder than it should be. And more value creation will happen outside our public markets — and increasingly, outside the country.
All of this has consequences beyond Bay Street. It means fewer domestic champions, less investor choice and a weaker connection between Canadian savings and Canadian enterprise.
Over time, it also erodes Canada’s long-term competitiveness — something the country can no longer afford to ignore.
Canada does not lack strong businesses or entrepreneurial talent. What we lack is a capital markets framework built for commercial reality.
We need a system that enables Canadian companies to grow — and lets Canadian investors grow with them.
Andrew Clark is CEO of Saltire Capital Ltd.
