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[Updated to October 1, 1998]
Contents
Section | ||
1 (1) In this Act:
"administrator" means the person to be known as the administrator of venture capital corporations and designated by the minister to perform the duties of the administrator under this Act;
"affiliate", if used to indicate a relationship between corporations, means any corporation where one is the subsidiary of the other, or both are subsidiaries of the same corporation, or
(a) each of them is controlled by the same person or the same group of persons, or
(b) one of them is controlled by one person and the other is controlled by an associate, as defined in paragraphs (e) or (f) of the definition of "associate", of that person;
"associate", if used to indicate a relationship with a person, means
(a) a corporation of which the person owns, directly or indirectly, shares carrying 10% or more of the outstanding voting rights for the election of the directors of the corporation,
(b) a partner of the person,
(c) a participant in a joint venture with the person,
(d) a trust or estate
(i) in which the person has, in the opinion of the administrator, a substantial beneficial interest, or
(ii) for which the person serves as trustee or in a similar capacity,
(e) a spouse, parent, grandparent, child, grandchild, brother or sister of the person, or
(f) a parent, grandparent, child, grandchild, brother or sister of the spouse of the person, residing in the same residence;
"debt obligation" includes a mortgage, bond, debenture, note, loan or similar obligation, whether secured or unsecured;
"eligible investment" means an investment permitted by section 10;
"employee" includes a person engaged by a small business for a prescribed period calculated in the prescribed manner;
"equity capital" means, subject to section 12 (2), the consideration in money received by a company before or after its registration under this Act as a venture capital corporation for its issued shares or by a small business for its issued equity shares;
"equity share" means a share of a class of shares carrying voting rights under all circumstances, but does not include a share having prescribed rights and restrictions;
"major shareholder", in relation to a corporation, means a person whose shares in the corporation, together with the shares, if any, owned by the person’s associates and affiliates,
(a) carry in the aggregate 10% or more of the voting rights, under any circumstances, attached to shares in the corporation, or
(b) carry in the aggregate less than 10% of the voting rights, under any circumstances, attached to shares in the corporation if the person is a member of a common interest group whose members own or hold shares which allow the group to control the corporation;
"ownership" includes beneficial ownership;
"small business" means a corporation that has no more than 75 employees calculated in the prescribed manner;
"spouse" means a person who is
(a) married to another person, or
(b) living with another person as husband and wife and has lived as such for a continuous period of 6 months;
"subsidiary" means a corporation which, in respect of another corporation, is controlled, either directly or indirectly, by that other corporation;
"venture capital corporation" means a corporation registered under section 3;
"widely held venture capital corporation" means a venture capital corporation that has no major shareholder.
(2) In a determination under this Act of whether a corporation is controlled by one or more persons, account must be taken of the relevant facts, including the existence of any option, warrant or right described in subsection (7) (b).
(3) Without limiting subsection (2), a corporation is controlled by a person or a common interest group if
(a) shares of the corporation carrying more than 50% of the outstanding voting rights for the election of the directors are held by or for the benefit of that person or common interest group, and
(b) the votes carried by the shares referred to in paragraph (a) are sufficient, if exercised, to elect a majority of the directors of the corporation.
(4) A corporation is the holding company of another corporation if that other corporation is its subsidiary.
(5) For the purposes of this Act, shares are deemed to be held for the benefit of an individual if they are beneficially owned by a corporation controlled by the individual or by an affiliate of that corporation.
(6) For the purposes of this Act, a corporation is deemed to own shares that are owned by its affiliates.
(7) For the purposes of this Act other than the definition of "affiliate" in subsection (1), in calculating the total number of shares of a corporation that are owned or controlled,
(a) if a share carries the right to more than one vote, each vote carried by the share is deemed to be a share, and
(b) there must be included in the total number of shares any share that would be issued or transferred following the exercise of
(i) an option, warrant or right, and
(ii) a conversion right that is attached to a debt obligation or to a share of the corporation.
(8) For the purposes of this Act, 2 or more persons holding the same shares or holding shares jointly are required to be counted as one shareholder.
(9) For the purposes of the holding of an investment referred to in sections 12 to 14, a small business does not cease to be a small business if, while the investment is held, the number of employees of the small business and its affiliates, is more than 75.
(10) A reference in this Act to a series of transactions or events includes any related transactions or events completed in contemplation of the series.
(11) Any calculation or determination under this Act or the regulations may be based on projections that the administrator considers to be reasonable.
2 (1) To apply for registration under this Act, a company must deliver to the administrator a proposal setting out all of the following:
(a) the name of the company and its incorporation date and number;
(b) the location of its head office, registered office and records office;
(c) the authorized equity capital;
(d) the number of issued shares and the amount received for them;
(e) the kind and amount of any outstanding debt obligation of the company;
(f) the number, names and resident addresses of its directors, officers and beneficial shareholders and the number of shares held by each;
(g) other information that is prescribed.
(2) A proposal must be signed by one director and one officer and be accompanied by a certified copy of the company’s memorandum and its articles.
(3) The administrator may request an applicant to supply information or documents in addition to those required under subsections (1) and (2).
3 (1) The administrator may, in the administrator’s discretion, register under this Act a company if the administrator is satisfied that the company meets all the following qualifications:
(a) is incorporated under the Company Act;
(b) has a name that includes "(VCC)" before the word or abbreviation required by section 16 (1) of the Company Act;
(c) has never previously carried on business;
(d) has or will have equity capital of at least $25 000;
(e) has authorized capital consisting of only one class of shares where the shares
(i) are shares without par value, and
(ii) have no special rights or restrictions;
(f) has a memorandum under section 5 of the Company Act that restricts the business of the company to assisting development of small businesses by
(i) making investments permitted by this Act, and
(ii) providing business and managerial expertise to small businesses in which it has made or proposes to make an eligible investment;
(g) meets other prescribed conditions.
(2) [Repealed 1998-42-48.]
(3) If the administrator accepts an application for registration under this Act, the administrator must issue a certificate to that effect, and the applicant is deemed to be registered on the date of registration contained in the certificate.
(4) Registration of a venture capital corporation under this section constitutes approval, as of the date of registration, for the issue of
(a) $50 000 of equity capital, or
(b) the amount of equity capital referred to in section 2 (1) (d),
whichever is greater.
4 (1) The administrator must maintain a register of venture capital corporations.
(2) The register must be open for public inspection during normal business hours at a place to be determined by the administrator.
(3) The register must contain the following information in respect of each venture capital corporation:
(a) the name of the venture capital corporation;
(b) the date it was registered;
(c) the location of its registered office;
(d) any other prescribed information.
5 (1) A venture capital corporation must, within 30 days after being registered, establish and maintain a place of business in British Columbia.
(2) A venture capital corporation must not maintain a place of business or permanent establishment, as defined in the Income Tax Act, outside of British Columbia.
6 (1) A venture capital corporation must not carry on any type of activity other than
(a) making investments permitted under section 18, and
(b) providing business and managerial expertise to small businesses in which it has made or proposes to make an eligible investment.
(2) No act of a venture capital corporation, including the transfer of property by or to it, is invalid merely because the act contravenes subsection (1).
(3) Subject to subsection (4), the equity capital of a venture capital corporation, including the equity capital referred to in section 9 (1), must not be greater than
(a) $5 million if it is not a reporting issuer as defined in the Securities Act, or
(b) $20 million if it is a reporting issuer as so defined.
(4) If the Lieutenant Governor in Council considers it to be in the public interest, the Lieutenant Governor in Council may by order in a particular case exempt a venture capital corporation from the limits of equity capital set out in subsection (3) (a) or (b) and specify other limits that are to apply in that particular case.
7 (1) All issued shares of a venture capital corporation must be fully paid for in cash.
(2) All share certificates of a venture capital corporation must conspicuously state the following on their face:
"The value of these shares may be significantly affected by the repayment provisions of section 22 of the Small Business Venture Capital Act."
(3) Without the written approval of the administrator, a venture capital corporation must not alter any of the following:
(a) its memorandum;
(b) its authorized capital;
(c) a provision of its articles respecting a matter referred to in section 3 (1) (e).
8 (1) By the end of its first year after the date of registration and afterwards, a venture capital corporation must have at least $50 000 of equity capital.
(2) A venture capital corporation must have an amount equal to 80% of any equity capital it has raised during its fiscal year invested in eligible investments no later than the end of the next succeeding fiscal year, and the venture capital corporation must afterwards keep at least that amount invested in eligible investments.
(3) For the purposes of subsection (2), the Lieutenant Governor in Council may make regulations providing that the amount of equity capital invested in an eligible investment is deemed to be less than the actual amount paid for the investment
(a) in prescribed circumstances, and
(b) to the extent prescribed for each circumstance.
9 (1) If, after its date of registration, a venture capital corporation proposes to issue additional equity capital, other than equity capital that has been approved under section 3 (4), it must apply to the administrator who may approve of that issue of additional capital subject to any conditions that the administrator may determine, including a condition that the shares may only be issued, as the administrator specifies, to investing entities or to persons, as defined in section 20 (1), and setting the maximum consideration for which these shares may be issued to those investing entities or persons.
(2) [Repealed 1998-42-48.]
10 (1) A venture capital corporation may make an investment in a small business if each of the following requirements is fulfilled:
(a) the small business, together with its affiliates, has no more than 75 employees calculated in the prescribed manner;
(b) unless otherwise provided by regulation, not less than
(i) 75% of the wages and salaries, determined in the prescribed manner, of the small business, and
(ii) 75% of the wages and salaries, determined in the prescribed manner, of the small business and its affiliates
are or will be paid to employees who regularly report to work at operations located in British Columbia;
(c) the small business is or will be substantially engaged, determined in the prescribed manner, in British Columbia in any one or more of the following activities:
(i) prescribed manufacturing and processing;
(ii) prescribed research and development;
(iii) prescribed tourism;
(iv) prescribed aquaculture;
(v) any other business activity that is prescribed;
(d) the investment consists or will consist of
(i) the direct acquisition from the small business of equity shares issued for the purpose of raising new equity capital, or
(ii) the acquisition by the venture capital corporation of equity shares issued by the small business in prescribed circumstances under a prospectus, offering memorandum or other disclosure document;
(e) the investment is not and will not be prohibited under sections 12 to 15.
(2) Despite subsection (1) (a) and (b), if
(a) a small business and another company are affiliates only because one of them is controlled by one person and the other by one or more persons described in paragraph (e) or (f) of the definition of "associate" in section 1 (1), and
(b) the administrator is satisfied that the small business and the other company do not have any agreement, commitment or understanding to conduct, in concert, any business,
then, in calculating the number of employees under subsection (1) (a) and the wages and salaries under subsection (1) (b), the administrator must not count the employees or wages and salaries of the affiliate of the small business.
(3) A regulation made for the purposes of subsection (1) (b) or (c) may provide differently for different business activities.
11 (1) If a venture capital corporation receives an offer to purchase equity shares or an option or right to purchase equity shares of
(a) a small business,
(b) a corporation that has ceased to be a small business, or
(c) a corporation, the shares of which have ceased to be an eligible investment.
it must not dispose of those shares or that option or right, unless it gives, for a period of at least 30 days, all other shareholders of the corporation, other than shareholders who are venture capital corporations, the right to purchase the shares, option or right, on the same terms and conditions as those contained in the offer to purchase.
(2) Subsection (1) does not apply if the small business or corporation referred to in paragraphs (a) to (c) of that subsection is a reporting company as defined in the Company Act.
12 (1) Subject to subsection (3), a venture capital corporation must not make or hold an investment in a small business if all or part of the proceeds of that investment are directly or indirectly used or intended to be used by the small business for any of the following purposes:
(a) lending;
(b) investment outside British Columbia, unless the investment is incidental or ancillary to the activities of the small business referred to in section 10 (1) (c);
(c) investment in land, unless the use of the land is incidental or ancillary to the activities of the small business referred to in section 10 (1) (c);
(d) acquiring securities;
(e) purchasing goods or services from a director, officer or shareholder of the venture capital corporation or from an associate of a director, officer or shareholder of the venture capital corporation, other than
(i) services of the type described in section 3 (1) (f) (ii) that are sold at fair market value, or
(ii) goods or services that are sold at fair market value to the small business in the ordinary course of the seller’s business as a seller of such goods or services on the open market;
(f) payment of all or part of a debt obligation, unless
(i) the administrator considers that the payment is necessary for the financial viability of the small business, or
(ii) the debt obligation was incurred with the prior approval of the administrator in anticipation of an investment in the small business by the venture capital corporation;
(g) as part of a transaction or series of transactions directly or indirectly involving any of the following:
(i) the purchase or redemption of previously issued shares of the small business or one of its affiliates;
(ii) the retirement of any part of a liability to a shareholder of the small business or one of its affiliates;
(iii) the payment of dividends;
(iv) except in prescribed circumstances, the funding of all or part of the purchase by the small business of all or a substantial portion of the assets of a proprietorship, partnership, joint venture, trust or corporation;
(v) the funding of all or part of the purchase by the small business of any of the assets of a proprietorship, partnership, joint venture, trust or corporation at a price that is greater than the fair market value of the assets purchased;
(vi) other prescribed events;
(h) other prescribed purposes.
(2) If a small business issues equity shares to a venture capital corporation in payment of all or part of a debt obligation that is the subject of an approval under subsection (1) (f) (ii), the original principal amount of all or part, as the case may be, of the debt obligation must, for the purposes of the definition of "equity capital" in section 1, be treated as if it were money received by the small business.
(3) Subsection (1) does not prohibit a venture capital corporation from making or holding an investment in a small business if the administrator is satisfied that the funds invested by the venture capital corporation were raised other than through the issue of approved equity capital.
13 (1) Subject to subsection (2), a venture capital corporation must not make or hold an investment in a small business if it and any other venture capital corporation or corporations or employee venture capital corporation or corporations, either alone or in conjunction with one or more of their
(a) associates or affiliates,
(b) shareholders or their associates or affiliates,
(c) directors or their associates, or
(d) officers or their associates,
will own, directly or indirectly, shares carrying more than 50% of the votes for the election of directors of the small business or will, in any manner, control the small business.
(2) If the administrator considers that a small business in which a venture capital corporation has made an eligible investment is in financial difficulty, the administrator may permit that corporation to temporarily control the small business under circumstances and on terms and conditions that the administrator may determine.
14 (1) A venture capital corporation must not make or hold an investment in a small business if any of the shares of the venture capital corporation are held by a person who is, or was at any time during the 2 years immediately preceding the investment, any of the following:
(a) a major shareholder of the small business;
(b) an associate of a major shareholder of the small business;
(c) a voting trust for which the trustee votes shares of the small business;
(d) the small business or an associate or affiliate of the small business.
(2) A venture capital corporation must not make or hold an investment in a small business if the small business or an associate, affiliate, director, officer or shareholder of the small business provides or has provided, directly or indirectly, as part of any transaction or series of transactions, a loan, guarantee or any other financial assistance to any of the following:
(a) the venture capital corporation;
(b) an associate or affiliate of the venture capital corporation;
(c) a director, officer or major shareholder of the venture capital corporation;
(d) a member of any common interest group in respect of the venture capital corporation.
15 A venture capital corporation must not make an investment in a small business if, as a result of that investment, the aggregate of all amounts received by that small business from the venture capital corporation and any other venture capital corporation or corporations, directly or indirectly, would be greater than $5 million.
16 (1) If an investment of a venture capital corporation becomes prohibited under sections 12 to 15, the venture capital corporation must, within 6 months after the investment became prohibited, dispose of that investment unless, within the 6 month period, the circumstances that caused the investment to be prohibited are changed to the extent that it is no longer prohibited under those sections.
(2) If the administrator is satisfied that noncompliance with a provision of sections 12 to 15 by the venture capital corporation occurred even though its officers and directors exercised the degree of care, diligence and skill to ensure compliance with sections 12 to 15 that a reasonably prudent person would have exercised in comparable circumstances, the administrator may, with or without conditions the administrator may require in any particular case, relieve the venture capital corporation for a period the administrator considers appropriate from the consequences of the noncompliance.
17 (1) If a small business in which a venture capital corporation has made an eligible investment no longer complies with the criteria set out in section 10 (1) (b) or (c), it must, within 6 months, dispose of that investment.
(2) Subsection (1) does not apply if, within the 6 month period referred to in that subsection, the circumstances that caused the investment not to comply with section 10 (1) (b) or (c) are changed so that it complies with that section.
18 (1) A venture capital corporation must not make any investments other than investments in the following:
(a) eligible investments;
(b) liquid reserves on deposit in British Columbia at a savings institution;
(c) a security, as defined in the Securities Act, of a small business, the equity shares of which would qualify as an eligible investment;
(d) the investment protection account under section 19;
(e) any other prescribed investment.
(2) The annual expenses of a venture capital corporation must not be greater than a prescribed amount, determined in the prescribed manner.
(3) The amount prescribed for the purposes of subsection (2) and the manner prescribed for determining it may be different for venture capital corporations with different amounts of issued equity capital.
19 (1) A venture capital corporation must pay an amount of money, equal to 30% of all amounts received by it as equity capital, into an investment protection account that meets criteria and complies with conditions established by the administrator.
(2) Subsection (1) does not apply if money that would otherwise be required to be paid into the investment protection account will, in the opinion of the administrator, be used to acquire an eligible investment.
(3) If the administrator is satisfied that
(a) a venture capital corporation has made an eligible investment, or will use the money to immediately make an eligible investment, and
(b) the sum of
(i) the amount to be paid out of the account,
(ii) any amounts previously paid out of the account, and
(iii) any money described in subsection (2) that has been previously used to acquire an eligible investment
is equal to or less than 37.5% of the venture capital corporation’s aggregate eligible investments,
the administrator must, subject to subsection (8), authorize payment out of the investment protection account to the venture capital corporation in accordance with subsection (4).
(4) The amount to be paid under subsection (3) is the lesser of
(a) 37.5% of the purchase price paid or to be paid for the eligible investment, or
(b) the total amount in the account.
(5) If
(a) the administrator certifies that money is payable to the Minister of Finance and Corporate Relations under section 22, and
(b) there is sufficient money in the investment protection account to pay all or part of the amount payable,
the money must be paid to the Minister of Finance and Corporate Relations.
(6) Interest earned on money in the investment protection account is payable to the venture capital corporation.
(7) Despite subsection (6), if
(a) the registration of a venture capital corporation is revoked under section 28, or
(b) a venture capital corporation fails to comply with section 8 (1) and (2),
the corporation must pay or cause to be paid to the government all income earned in respect of the investment protection account between the time the account was opened and the time of revocation or the time at which the period referred to in section 8 (2) expires.
(8) The administrator may refuse an authorization under subsection (3) if the administrator considers that the venture capital corporation or any of its directors, officers or shareholders
(a) is conducting the business or affairs of the venture capital corporation in a manner that is contrary to the spirit and intent of this Act, or
(b) is in contravention of this Act or the regulations.
(9) If a venture capital corporation acquires shares of its own issue and the administrator is satisfied that no tax credits under section 21 of the Income Tax Act or grants under section 20 (6) of this Act have been or will be issued or paid in respect of those shares, the administrator may authorize an amount calculated in the prescribed manner to be paid out of the investment protection account to the venture capital corporation.
20 (1) In this section:
"investing entity" means
(a) an entity that meets prescribed criteria, or
(b) a person, as defined in the Interpretation Act, who meets prescribed criteria;
"person" means
(a) an individual to whom section 2 (1) of the Income Tax Act applies, or
(b) a corporation to which section 2 (2) of the Income Tax Act applies.
(2) A regulation for the purpose of paragraph (a) or (b) of the definition of "investing entity" in subsection (1) may provide differently for different classes of entities or persons.
(3) A venture capital corporation must, on behalf of its shareholders who are persons, apply for a tax credit certificate entitling each of those shareholders to a tax credit under section 21 of the Income Tax Act, equal to 30% of the amount received by the venture capital corporation from those shareholders for those shares.
(4) If a venture capital corporation makes an application under subsection (3), the administrator must, following the approval of the Minister of Finance and Corporate Relations and in accordance with the provisions of section 21 of the Income Tax Act, issue a tax credit certificate in the amount referred to in subsection (3), unless the administrator considers that the venture capital corporation or its directors, officers or shareholders are conducting the business or affairs of the venture capital corporation in a manner that is contrary to the spirit and intent of this Act whether or not there has been a contravention of this Act or the regulations.
(5) A venture capital corporation must, on behalf of its shareholders who are investing entities, apply for a grant equal to 30% of the amount received by the venture capital corporation from those shareholders for those shares.
(6) If a venture capital corporation makes an application under subsection (5), the administrator must authorize payment of a grant, in the amount referred to in subsection (5), unless the administrator considers that the venture capital corporation or its directors, officers or shareholders are conducting the business or affairs of the venture capital corporation in a manner that is contrary to the spirit and intent of this Act, whether or not there has been a contravention of this Act or the regulations.
(7) The administrator must not issue a tax credit certificate under subsection (4) or authorize payment of a grant under subsection (6) unless the administrator is satisfied that all of the following requirements are met:
(a) the venture capital corporation has established and maintained the investment protection account as required under section 19;
(b) no tax credit or grant under this section has been previously allowed or paid for those shares;
(c) the equity capital, in respect of which the tax credit or grant applied for, consists of equity capital of the venture capital corporation that has been approved in accordance with section 3 (4) or 9 (1);
(d) the share, in respect of which the tax credit or grant applied for, is not a type of security that entitles the holder to claim a tax credit against tax payable under the Income Tax Act (Canada) with respect to the purchase of that share unless the Lieutenant Governor in Council has, by regulation, designated such a credit to be exempt from the provisions of this paragraph;
(e) the shareholder has acquired the share directly from the venture capital corporation or its agent acting in that behalf;
(f) the shareholder, if an individual, was resident in British Columbia at the date the shareholder subscribed for the shares.
(8) [Repealed 1998-42-48.]
21 (1) The Lieutenant Governor in Council may, in respect of any year, prescribe amounts to be known as the annual maximum venture capital grant and the annual maximum venture capital tax credit.
(2) If in any year the minister considers that, in respect of the issue of equity capital that was approved under section 3 (4) or 9 (1) in that year, the amounts that will be paid out under section 20 (6) will be greater than the annual maximum venture capital grant, the administrator must not, for the remainder of that year, approve any issue of equity capital under section 9 (1) in respect of shares that are proposed to be issued to investing entities, as defined in section 20 (1).
(3) If in any year the minister considers that, in respect of the issue of equity capital that was approved under section 3 (4) or 9 (1) in that year, the amounts that will be payable or paid under section 21 (3) or (5) of the Income Tax Act, or deductible or deducted under section 21 of the Income Tax Act will be greater than the annual maximum venture capital tax credit, the administrator must not, for the remainder of that year, approve any issue of equity capital under section 9 (1) in respect of shares that are proposed to be issued to persons, as defined in section 20 (1).
(4) If in any year the minister considers that, in respect of the issue of equity capital that was approved under section 3 (4) or 9 (1) in that year, the amounts that will be
(a) paid out under section 20 (6) of this Act,
(b) payable or paid under section 21 (3) or (5) of the Income Tax Act, and
(c) deductible or deducted under section 21 of the Income Tax Act,
will be greater than the aggregate of the annual maximum venture capital grant and the annual maximum venture capital tax credit,
(d) the minister may suspend further registrations of venture capital corporations under this Act for that year, and
(e) the administrator must not, for the remainder of that year, approve of any additional issue of equity capital under section 9 (1).
22 (1) If a venture capital corporation directly or indirectly acquires one of its own shares, the venture capital corporation must pay to the Minister of Finance and Corporate Relations an amount of money calculated in accordance with subsection (2).
(2) If a venture capital corporation acquires one or more of its own shares for a total consideration that
(a) is equal to or greater than that for which the share was issued, the venture capital corporation must pay to the Minister of Finance and Corporate Relations an amount of money equal to 30% of the consideration paid to the venture capital corporation by the shareholder for the share at the time the share was issued, or
(b) is less than that for which the share was issued, the venture capital corporation must pay to the Minister of Finance and Corporate Relations an amount equal to 30% of the greater of
(i) the consideration paid by the venture capital corporation for the acquisition of the share, or
(ii) the amount that the administrator considers was the fair market value of the share, at the time it was acquired, but the amount under this subparagraph must not be greater than the consideration that was paid to the venture capital corporation for the issue of those shares.
(3) If a venture capital corporation
(a) is deemed to have acquired a share under section 23, or
(b) is deemed under section 25 (i) to have acquired all of its shares,
the venture capital corporation must pay to the Minister of Finance and Corporate Relations an amount equal to 30% of the consideration paid to the venture capital corporation in respect of the issue of that share or those shares.
(4) For the purposes of this section, a venture capital corporation is deemed to have acquired one of its own shares at the time the shareholder disposing of the share first receives consideration from the venture capital corporation in relation to that disposition.
(5) The amount to be paid to the Minister of Finance and Corporate Relations under this section is a debt due to the government.
(6) The amount to be paid to the Minister of Finance and Corporate Relations under this section must not be greater than the aggregate of the tax credits issued and grants authorized in respect of those shares.
23 For the purposes of section 22, a venture capital corporation is deemed to have acquired a share if it does any of the following:
(a) passes a resolution cancelling a share under section 232 (1) (b) of the Company Act;
(b) passes a special resolution reducing its capital under section 233 (1) of the Company Act;
(c) passes a resolution redeeming or purchasing shares under section 235 of the Company Act.
24 (1) If a venture capital corporation does all of the following, the administrator must cancel that venture capital corporation’s registration:
(a) passes a special resolution requesting cancellation of its registration;
(b) passes a special resolution under section 223 (1) of the Company Act changing its name to delete "(VCC)" from it;
(c) presents proof satisfactory to the administrator that it has complied with sections 19 (5) and (7) and 22 of this Act.
(2) On cancellation under subsection (1), the corporation may carry on business in accordance with the Company Act.
25 If a venture capital corporation
(a) has its registration under this Act revoked,
(b) is struck off the register under section 257 of the Company Act,
(c) has an order made against it under section 256 of the Company Act,
(d) passes a resolution to dissolve under section 258 of the Company Act,
(e) passes a voluntary winding up resolution under section 267 of the Company Act,
(f) has a winding up order made against it under section 200 (2) (f) or 271 of the Company Act,
(g) enters into an amalgamation agreement under section 248 of the Company Act other than where the amalgamation has been approved, with or without conditions, by the administrator under section 7, or
(h) passes a resolution requesting cancellation under section 24,
the venture capital corporation
(i) is deemed, for the purposes only of section 22 (3), to have acquired all its shares at the time the event referred to in paragraphs (a) to (h) of this section occurs, and
(j) must make payment to the Minister of Finance and Corporate Relations as required by section 22 (3).
26 (1) In relation to a corporation that is or was a venture capital corporation,
(a) a director or officer of the corporation,
(b) a member of a common interest group that controls the corporation, or
(c) a shareholder who controls the corporation,
who authorized, permitted or acquiesced in a transaction, event, or series of transactions or events that the director, officer or other person knew or ought to have known, at the time of the authorization, permission or acquiescence, would render the corporation incapable of making a payment under section 19 (5) or (7) or 22, is liable to pay to the government an amount equal to the amount that the corporation is incapable of paying under section 19 (5) or (7) or 22 because of the transaction, event or series of transactions or events.
(2) If,
(a) on the basis of information supplied by a director, officer or shareholder of a venture capital corporation, a tax credit certificate has been issued or a grant has been authorized under section 20,
(b) that information is false or misleading, and
(c) the director, officer or shareholder knew, or ought to have known, that it was false or misleading,
the director, officer or shareholder who supplied it is liable to pay to the government the amount of the tax credit or grant, as the case may be.
27 (1) If the administrator is satisfied that a venture capital corporation has complied with this Act and the regulations, the administrator may, with respect to amounts invested in an eligible investment, make a forgiveness order at any time after the expiry of 5 years from the date of making the eligible investment.
(2) If the administrator makes a forgiveness order under subsection (1), the liability of the venture capital corporation to make payment under section 22 is reduced by an amount determined by the administrator not greater than 37.5% of the amounts invested in the eligible investments.
(3) In determining the amount of a forgiveness order under subsection (1), the administrator must take into account any matters the administrator considers relevant including, without restriction, any liability of the venture capital corporation to make payment under section 22 that will remain after the making of the order.
28 (1) The administrator may suspend or revoke a registration of a venture capital corporation in any of the following circumstances:
(a) the corporation obtained its registration fraudulently or by furnishing false or misleading information or documents;
(b) the corporation fails to supply information or records when they are required under this Act or the regulations;
(c) the corporation supplied information or records referred to in paragraph (b) that contain false or misleading information;
(d) the corporation fails to comply with this Act, the regulations or a condition of approval that the administrator may make or give under this Act or the regulations;
(e) the administrator considers that the corporation or its directors, officers or shareholders are conducting the business or affairs of the corporation in a manner that is contrary to the spirit and intent of this Act, whether or not there has been a contravention of this Act or the regulations.
(2) If the administrator suspends a registration under subsection (1), the administrator may
(a) attach conditions to be complied with by the suspended venture capital corporation during the period of suspension, and
(b) reinstate the registration with or without conditions.
(3) If a venture capital corporation does not comply with this Act or the regulations, but the administrator considers that the corporation is conducting its business and affairs in a manner consistent with the spirit and intent of this Act, the administrator may do any of the following:
(a) for any time that the administrator considers appropriate, refrain from revoking the registration of the venture capital corporation;
(b) permit registration of the venture capital corporation and, for any time that the administrator considers appropriate, refrain from revoking the registration of the venture capital corporation;
(c) issue a tax credit certificate or authorize payment of a grant under section 20;
(d) reduce the amount that would otherwise be required to be deposited into the investment protection account referred to in section 19.
29 Within 6 months after its fiscal year end, a venture capital corporation must prepare and file with the administrator a return setting out prescribed information.
30 (1) The administrator or a person designated by the administrator may, during normal business hours, make an examination of the affairs of
(a) a venture capital corporation,
(b) a corporation that was a venture capital corporation, or
(c) a small business, corporation or other entity in which a venture capital corporation has made an investment,
for the purpose of determining whether or not the venture capital corporation or corporation that was a venture capital corporation is complying with or has complied with this Act and the regulations.
(2) The administrator or person making the examination under this section is entitled, for purposes of determining compliance under this Act, to free access to all records, securities, cash and savings institution accounts of the venture capital corporation, small business, corporation or other entity being examined, and may make copies of any record to which he or she is entitled to free access.
31 (1) The administrator may, by order,
(a) appoint a person to make whatever investigation the administrator considers appropriate for the administration of this Act, and
(b) determine the scope of the investigation.
(2) On the application of the administrator or the investigator appointed under subsection (1), and on being satisfied by information on oath that it is necessary and in the public interest for any purpose relating to an investigation under subsection (1), the Supreme Court may make an order authorizing the investigator
(a) to enter into the premises or on the land of a person at any reasonable time for the purpose of carrying out an inspection or examination,
(b) to require the production of any records, securities or things and to inspect or examine them, and
(c) on giving a receipt, to remove any records, securities or things inspected or examined under paragraph (b) for the purpose of further inspection or examination.
(3) An application for an order under subsection (2) must be made in the prescribed manner.
(4) Unless the Supreme Court otherwise directs, an application for an order under subsection (2) may be
(a) made without notice to any other person, and
(b) heard in private.
(5) Inspection or examination under subsection (2) must be completed as soon as practical and the records, securities or things must be promptly returned to the person who produced them.
(6) A person must not withhold, destroy, conceal or refuse to give any information or produce any record, security or thing reasonably required under this section by the investigator.
32 (1) An investigator appointed under section 31 has the same power as the Supreme Court has for the trial of civil actions
(a) to summon and enforce the attendance of witnesses,
(b) to compel witnesses to give evidence on oath or in any other manner, and
(c) to compel witnesses to produce records, securities and things.
(2) The failure or refusal of a witness
(a) to attend,
(b) to take an oath,
(c) to answer questions, or
(d) to produce the records, securities and things in the person’s custody or possession
makes the witness, on application to the Supreme Court, liable to be committed for contempt as if in breach of an order or judgment of the Supreme Court.
(3) Section 34 of the Evidence Act does not exempt any financial institution, as defined in that section, or any officer or employee of the financial institution from the operation of this section.
(4) A witness giving evidence at an investigation conducted under section 31 may be represented by counsel.
33 A person appointed under section 31 must provide the administrator with a complete report of the investigation made including any transcript of evidence and material in the person’s possession relating to the investigation.
34 The administrator may extend, with or without conditions, the time limit for the doing of anything under this Act or the regulations and may grant the extension even if the time limit to be extended has expired.
35 (1) A person who does any of the following commits an offence:
(a) makes a statement in any record, evidence or information submitted or given under this Act or the regulations to the administrator or to a person conducting an investigation under section 31 that, at the time and in the light of the circumstances under which the statement is made, is false or misleading with respect to a material fact or that omits to state a material fact, the omission of which makes the statement false or misleading;
(b) makes a statement in a proposal, report, return or other record required to be filed or furnished under this Act or the regulations that, at the time and in the light of the circumstances under which the statement is made, is false or misleading with respect to a material fact or that omits to state a material fact, the omission of which makes the statement false or misleading;
(c) withholds, destroys or conceals a record or thing referred to in section 30 (2) after it has been required by a person conducting an examination under that section;
(d) contravenes section 31 (6);
(e) impedes the investigator from entering premises under section 31 (2) (a);
(f) fails to comply with a requirement under section 29.
(2) If a corporation is convicted of an offence under subsection (1) (a) to (d), the maximum fine that may be imposed is $100 000.
(3) If a corporation commits an offence under subsection (1), every director or officer of the corporation who authorized, permitted or acquiesced in the offence also commits an offence.
(4) If an individual commits an offence under subsection (1) (a) to (d) or (3), he or she is liable to a maximum fine of $50 000 or to imprisonment for not more than one year, or to both the fine and imprisonment.
(5) A person does not commit an offence under this section in relation to a statement if the person did not know that the statement was false or misleading and, in the exercise of reasonable diligence, could not have known that the statement was false or misleading.
(6) Section 5 of the Offence Act does not apply to this Act.
36 A proceeding under this Act must not be commenced more than 2 years after the facts on which the proceedings are based first came to the knowledge of the administrator.
37 (1) The Lieutenant Governor in Council may make regulations referred to in section 41 of the Interpretation Act.
(2) Without limiting subsection (1), the Lieutenant Governor in Council may make regulations as follows:
(a) for any purpose for which regulations are contemplated by this Act;
(b) that the Lieutenant Governor in Council considers to be necessary or advisable and to be ancillary to the purposes of this Act;
(c) defining any word or expression used but not defined in this Act;
(d) requiring a person to make information returns respecting any class of information required in assessing compliance with this Act;
(e) establishing periods of time to be taken into account in calculations or determinations under this Act or the regulations.