A Junior Capital Pool (JCP) is a corporate structure permitted only in Canada that allows companies to raise capital through the issuance of shares before they begin operations. The JCP was created in response to a 1980s boom in the oil and gas exploration industry, and trades exclusively on the Toronto Stock Exchange.

The purpose of a JCP is to provide an opportunity for entrepreneurs, financiers and other potential corporate investors to acquire risk capital without assuming the burdens of a fully operational corporate entity. All proceeds from the sale of the shares become the capital pool from which the JCP makes investments. A JCP is not permitted to use a conventional public offering, and so instead sells the shares to capital pool investors in a private offering.

These investors are only able to exercise the voting rights that come with their shares once the JCP has actually identified a qualifying acquisition. If these conditions are met, the JCP will then proceed with a reverse takeover by amalgamating with, or acquiring, a specific corporate entity whose assets, shares and liabilities would ultimately become those of the JCP. After the JCP succeeds in making a qualifying acquisition, the original capital pool investors are permitted to trade the JCP shares that they acquired through the private offering on the open market.

The new corporate entity formed out of this process can then proceed to do business, offering its products and services, or continuing to perform the activities of the qualifying entity and issuing further shares if necessary.

Throughout the process, the JCP must always remain in compliance with the terms and conditions of the JCP Rules - a set of standards governing the issuance of capital pool shares, the identifying and acquiring of a qualifying acquisition and the subsequent changes to the structure of the JCP itself.

In conclusion, the JCP corporate structure can provide potentially lucrative opportunities for investors and entrepreneurs alike. With a JCP, investors have the potential to mitigate risk for themselves by acquiring shares before the JCP has begun operations, and then draw upon the capital pool to fund a qualifying acquisition that can increase their relative investment value. For entrepreneurs, a JCP can represent a viable method of raising capital to pursue their corporate objectives without the usual financiers and associated financial pressures.