Marginal note:Conditions for registration
204.81 (1) The Minister may register a corporation for the purposes of this Part if, in the opinion of the Minister, it complies with the following conditions:
(a) the corporation has applied in prescribed form to the Minister for registration;
(b) the corporation was caused to be incorporated under the Canada Business Corporations Act by an eligible labour body; and
(c) the articles of the corporation provide that
(i) the business of the corporation is restricted to assisting the development of eligible business entities and to creating, maintaining and protecting jobs by providing financial and managerial advice to such entities and by investing funds of the corporation in eligible investments and reserves,
(ii) the authorized capital of the corporation shall consist only of
(A) Class A shares that are issuable only to individuals (other than trusts) and trusts governed by registered retirement savings plans, that entitle their holders
(I) to receive notice of and, subject to the Canada Business Corporations Act, to attend and vote at all meetings of the shareholders of the corporation,
(II) to receive dividends at the discretion of the board of directors of the corporation, and
(III) to receive, on dissolution of the corporation, all the assets of the corporation that remain after payment of all amounts payable to the holders of all other classes of shares of the corporation,
(B) Class B shares that are issuable only to and may be held only by eligible labour bodies, that entitle each of those shareholders
(I) to receive notice of and, subject to the Canada Business Corporations Act, to attend and vote at all meetings of the shareholders of the corporation, and
(II) to receive, on dissolution of the corporation, an amount equal to the amount of the consideration received by the corporation on the issue of the Class B shares,
but that do not entitle them to receive dividends, and
(C) any additional classes of shares that are authorized, if the rights, privileges, restrictions and conditions attached to the shares are approved by the Minister of Finance,
(iii) the business and affairs of the corporation shall be managed by a board of directors, at least 1/2 of whom are appointed by the Class B shareholders,
(iv) the corporation shall not reduce its paid-up capital in respect of a class of shares (other than Class B shares) otherwise than by way of a redemption of shares of the corporation or in such other manner as is prescribed,
(v) the corporation shall not redeem a Class A share in respect of which an information return described in paragraph 204.81(6)(c) has been issued unless
(A) where the share is held by the specified individual in respect of the share, a spouse or common-law partner or former spouse or common-law partner of that individual or a trust governed by a registered retirement savings plan or registered retirement income fund under which that individual, spouse or common-law partner is the annuitant,
(I) a request in writing to redeem the share is made by the holder to the corporation and the information return referred to in paragraph 204.81(6)(c) has been returned to the corporation, or
(II) [Repealed, 1997, c. 25, s. 56(4)]
(III) the corporation is notified in writing that the specified individual in respect of the share became disabled and permanently unfit for work or terminally ill after the share was issued,
(B) there is no specified individual in respect of the share,
(C) [Repealed, 1997, c. 25, s. 56(5)]
(D) the corporation is notified in writing that the share is held by a person on whom the share has devolved as a consequence of the death of
(I) a holder of the share, or
(II) an annuitant under a trust governed by a registered retirement savings plan or registered retirement income fund that was a holder of the share,
(E) the redemption occurs more than 8 years after the day on which the share was issued, or
(F) the holder of the share has satisfied such other conditions as are prescribed,
(vi) [Repealed, 1997, c. 25, s. 56(7)]
(vii) the corporation shall not register a transfer of a Class A share by the specified individual in respect of the share, a spouse or common-law partner of the specified individual or a trust governed by a registered retirement savings plan or registered retirement income fund under which the specified individual or spouse or common-law partner is the annuitant, unless
(A) no information return has been issued under paragraph 204.81(6)(c) in respect of the share,
(B) [Repealed, 1997, c. 25, s. 56(8)]
(C) the transfer is to the specified individual, a spouse or common-law partner or former spouse or common-law partner of the specified individual or a trust governed by a registered retirement savings plan or registered retirement income fund under which the specified individual or the spouse or common-law partner or former spouse or common-law partner of the specified individual is the annuitant,
(D) the corporation is notified in writing that the transfer occurs as a consequence of the death of the specified individual or a spouse or common-law partner of the specified individual,
(E) the corporation is notified in writing that the transfer occurs after the specified individual dies,
(F) [Repealed, 1997, c. 25, s. 56(9)]
(G) the corporation is notified in writing that the specified individual became disabled and permanently unfit for work or terminally ill after the share was issued and before the transfer, or
(H) such other conditions as are prescribed are satisfied.
(viii) the corporation shall not pay any fee or remuneration to a shareholder, director or officer of the corporation unless the payment was approved by a resolution of the directors of the corporation, and
(ix) the corporation shall not make any investment in an eligible business entity with which the corporation or any of the directors of the corporation does not deal at arm’s length unless
(A) the corporation would deal at arm’s length with the eligible business entity but for the corporation’s interest as the holder of eligible investments in such entity, or
(B) the investment was approved by special resolution of the shareholders of the corporation before the investment was made.
Marginal note:Registration number
(2) On registering a corporation under subsection 204.81(1), the Minister shall assign to it a registration number.
Marginal note:Successive registrations
(3) Where an eligible labour body causes more than one corporation to be registered under this Part, for the purposes of paragraph 204.81(6)(h) and section 204.82, each of those corporations shall be deemed
(a) to have issued a Class A share at the earliest time any such corporation issued a Class A share,
and, where the corporation did not exist at the time referred to in paragraph 204.81(3)(a),
(b) to have been in existence during the particular period beginning immediately before that time and ending immediately after the corporation was incorporated, and
(c) to have had, throughout the particular period, fiscal periods ending on the same calendar day in each year in the particular period as the calendar day on which its first fiscal period after it was incorporated ended.
Marginal note:Determination of cost
(4) For the purposes of this Part, the cost at any time to a corporation of an eligible investment that is a guarantee shall be deemed to be 25% of the amount of the debt obligation subject to the guarantee at that time.
Marginal note:Registration date
(5) Where the Minister registers a corporation for the purposes of this Part, the corporation shall be deemed to have become so registered on the later of
(a) the day the application for registration of the plan is received by the Minister, and
(b) where in the application for registration a day is specified as the day on which the registration is to take effect, that day.
Marginal note:Revocation of registration
(6) The Minister may revoke the registration of a corporation for the purposes of this Part where
(a) the articles of the corporation do not comply with paragraph 204.81(1)(c) and would not comply with that paragraph if the corporation had been incorporated after December 5, 1996;
(a.1) the corporation does not comply with any of the provisions of its articles described in paragraph 204.81(1)(c), except where there would be no failure to comply if the provisions of its articles were consistent with the articles of a corporation that would be permitted to be registered under this Part if it had been incorporated after December 5, 1996;
(b) an individual acquires or irrevocably subscribes and pays for a Class A share of the capital stock of the corporation in the period beginning on the 61st day of a calendar year and ending on the 60th day of the following calendar year and the corporation fails to file with the Minister an information return in prescribed form containing prescribed information before April of that following calendar year;
(c) an individual acquires or irrevocably subscribes and pays for a Class A share of the capital stock of the corporation in the period beginning on the 61st day of a calendar year and ending on the 60th day of the following calendar year and the corporation fails to issue to the individual before April of that following calendar year an information return in prescribed form stating the amount of the consideration paid for the share in that period;
(d) the corporation issues more than one information return described in paragraph 204.81(6)(c) in respect of the same acquisition of or subscription for a Class A share;
(e) the financial statements of the corporation presented to its shareholders are not prepared in accordance with generally accepted accounting principles;
(f) the corporation fails within 6 months after the end of any taxation year to have an independent valuation of its shares made as of the end of that year;
(g) [Repealed, 2000, c. 19, s. 55(1)]
(h) the corporation does not pay the tax or penalty payable under section 204.82 by it on or before the day on or before which that tax or penalty is required to be paid;
(i) tax was payable under subsection 204.82(3) by the corporation for 3 or more taxation years;
(j) the corporation provides a guarantee that is an eligible investment and fails to maintain, at any time during the term of the guarantee, a reserve equal to the cost to the corporation of the guarantee at that time;
(k) the corporation pays a fee or commission in excess of a reasonable amount in respect of the offering for sale, or the sale, of its shares; or
(l) the corporation has a monthly deficiency in 18 or more months in any 36-month period.
Marginal note:Notice of intent to revoke registration
(7) Where the Minister proposes to revoke the registration of a corporation under subsection 204.81(6), the Minister shall, by registered mail, give notice to the corporation of the proposal.
Marginal note:Idem
(8) Where the Minister gives notice under subsection 204.81(7) to a registered labour-sponsored venture capital corporation, the Minister may, after the expiration of 30 days after the day of mailing of the notice, or after the expiration of such extended period after the day of mailing as the Federal Court of Appeal or a judge thereof, on application made at any time before the determination of any appeal under subsection 204.81(9) from the giving of the notice, may fix or allow, publish a copy of the notice in the Canada Gazette and, on the publication of a copy of the notice, the registration of the corporation is revoked.
Marginal note:Voluntary de-registration
(8.1) Where at any time the Minister receives a certified copy of a resolution of the directors of a corporation seeking the revocation of the corporation’s registration under this Part,
(a) the registration is revoked at that time; and
(b) the Minister shall, with all due dispatch, give notice in the Canada Gazette of the revocation.
Marginal note:Application of subsection 248(7)
(8.2) Subsection 248(7) does not apply for the purpose of subsection (8.1).
Marginal note:Right of appeal
(9) Where the Minister refuses to accept a corporation for registration under subsection 204.81(1) or gives notice of a proposal to revoke the registration of a corporation under subsection 204.81(7), the corporation may appeal to the Federal Court of Appeal from the decision or from the giving of the notice.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 1994, c. 7, Sch. II, s. 164, Sch. VIII, s. 119, c. 8, s. 30
- 1997, c. 25, s. 56
- 1998, c. 19, s. 52
- 2000, c. 12, ss. 137, 142, c. 19, s. 55
- Date modified: