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The Manitoba Employee Ownership Fund Corporation and Consequential Amendments Act

S.M. 1991-92, c. 48

Bill 75, 2nd Session, 35th Legislature

The Manitoba Employee Ownership Fund Corporation and Consequential Amendments Act

(Assented to July 26, 1991)

WHEREAS the Government of Manitoba and the Manitoba Federation of Labour recognize the need to support economic development and renewal and consider it to be in the public interest to promote long-term capital formation and a broad understanding of local ownership;

AND WHEREAS it is in the public interest to establish the Crocus Investment Fund ("the Fund") for the purpose of making investments with a view to earning income and promoting and maintaining

(a)capital retention and economic stability in Manitoba,

(b)employee ownership in Manitoba businesses, and

(c)business continuity, job retention and creation and ownership of Manitoba businesses by Manitobans;

AND WHEREAS it is intended that the Fund will, among other things, make investments in Manitoba businesses that operate in accordance with ethical policies with respect to employment practices, workplace safety, environmental suitability and other matters;

AND WHEREAS the Fund is intended to provide investment capital and other financial assistance and other services to Manitoba businesses to enable them to create, maintain and protect jobs;

AND WHEREAS it is intended every Manitoban who is an individual be entitled to invest in the Fund and be eligible for tax credits;

AND WHEREAS it is intended that the Fund will provide an opportunity for long-term investment that can be used to supplement employee savings through conventional retirement plans or pension plans;

AND WHEREAS, through the investment activities of the Fund, investor and employee awareness and knowledge relating to economic and management matters will increase enabling investors and employees to increase their influence on provincial economic development;

NOW THEREFORE HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART 1

INTERPRETATION AND APPLICATION

Definitions

1(1)        In this Act,

"Board" means the Board of Directors of the Fund; («conseil»)

"eligible investment" means

(a)a share in the capital stock of a corporation that is a qualified Manitoba business entity,

(b)a partnership interest in a partnership that is a qualified Manitoba business entity,

(c)a debt obligation of a qualified Manitoba business entity that meets the following requirements:

(i)by its terms, or by the terms of any agreement related to it, it does not restrict the qualified Manitoba business entity from incurring other debts,

(ii)by its terms, or by the terms of any agreement related to it, it is subordinated to all other debt obligations of the qualified Manitoba business entity except, where the qualified Manitoba business entity is a corporation, the debt obligation need not be subordinate to a debt obligation

(A)issued by the qualified Manitoba business entity that is prescribed as a small business security for the purposes of paragraph (a) of the definition "small business property" in subsection 206(1) of the Income Tax Act (Canada), or

(B)owing to a shareholder of the qualified Manitoba business entity or to a person related to any of its shareholders,

(iii)it is secured solely by a floating charge on the assets of the qualified Manitoba business entity,

(d)a debt obligation of a qualified Manitoba business entity that requires that the funds advanced to the qualified Manitoba business entity by the Fund be advanced by the qualified Manitoba business entity to another entity all or substantially all of whose assets are investments of a type referred to in clause (a), (b) or (c),

(e)a guarantee provided by the Fund in respect of a debt obligation that, if the Fund had acquired the debt obligation at the time the guarantee was given, would have been a debt obligation described in clause (c), (d) or (f) at that time,

(f)a debt obligation issued by a qualified Manitoba business entity, all or substantially all of whose assets are investments described in clause (a), (b), (c), (d) or (f), or

(g)an option or right granted by a qualified Manitoba business entity, in conjunction with the acquisition by the Fund of an investment that is described in clause (a), (b), (c), (d), (e) or (f), to acquire a share of the capital stock of a corporation or an interest in a partnership that would have been described in clause (a) or (b), if the share or partnership interest had been issued at the time of the option or right was granted; («placement admissible»)

"entity" means

(a)a corporation that is a taxable Canadian corporation,

(b)a partnership of corporations, each of which is a taxable Canadian corporation, or

(c)a trust that is resident in Canada; («entité»)

"Fund" means the Crocus Investment Fund incorporated by subsection 3(1); («Fonds»)

"investment assets", when used with respect to the Fund, means all of the assets of the Fund other than operating assets used by it directly in carrying on its business; («actif de placement»)

"qualified Manitoba business entity" means an entity

(a)that carries on business in Manitoba, has assets of a value less than $50,000,000. and has a majority of its employees in Manitoba, or

(b)substantially all of whose assets would be eligible investments had they been owned by the Fund directly and that has assets of a value less than $50,000,000.; («entité manitobaine admissible»)

"taxable Canadian corporation" means a taxable Canadian corporation as defined in the Income Tax Act (Canada); («corporation canadienne imposable »)

"valuation date" means a date or dates determined by by-law of the Board. («jour d'évaluation»)

Interpretation of "related"

1(2)        For the purposes of paragraph (c)(ii)(B) of the definition of "eligible investment", a person is related to a shareholder if the person is related to the shareholder as provided in section 251 of the Income Tax Act (Canada).

Interpretation of "secured"

1(3)        For the purposes of subclause (c)(iii) of the definition of "eligible investment", a debt obligation is not secured by reason only that a guarantee is given in respect of that obligation.

Determination of value of assets

1(4)        For the purpose of determining the value of the assets of an entity in the definition of "qualified Manitoba business entity", the assets of a corporation, partnership or trust are deemed to include the assets of any other corporation, partnership or trust that is an affiliate of the corporation, partnership or trust.

Interpretation of "affiliate"

1(5)        For the purposes of subsection (4), a corporation, partnership or trust is deemed to be an affiliate of another corporation, partnership or trust if one of them is controlled by the other or if each of them is controlled by the same person, corporation, partnership or trust.

Control of corporation

1(6)        A person, corporation, partnership or trust is deemed to control a corporation, if

(a)it owns shares in the corporation carrying more than 50% of the votes for the election of directors of the corporation; or

(b)it owns shares of the capital stock of the corporation having a fair market value of more than 50% of the fair market value of all of the issued shares of the capital stock of the corporation.

Control of partnership

1(7)        A person, corporation, partnership or trust is deemed to control a partnership if

(a)it owns interests in the capital or income of the partnership carrying more than 50% of the votes associated with all interests in the capital or income of the partnership; or

(b)it owns interests in the capital or income of the partnership having a fair market value of more than 50% of the fair market value of all of the interests in the capital or income of the partnership.

Control of trust

1(8)        A person, corporation, partnership or trust is deemed to control a trust if

(a)where the terms of the trust provide that the beneficiaries of the trust are entitled to vote on any matter concerning the business or affairs of the trust, it owns interests in the capital or income of the trust carrying more than 50% of the votes associated with all interests in the capital or income of the trust; or

(b)it owns interests in the capital or income of the trust having a fair market value of more than 50% of the fair market value of all of the interests in the capital or income of the trust.

Beneficial ownership

1(9)        For the purpose of determining whether a corporation, partnership or trust is controlled by a person, corporation, partnership or trust, a person, corporation, partnership or trust shall be deemed to own beneficially shares, partnership interests or interests in the capital or income of a trust that are owned beneficially by any corporation, partnership or trust that is an affiliate of the person, corporation, partnership or trust.

Application of Corporations Act

2(1)        Except as provided in this Act, The Corporations Act applies to the Fund with such modifications as the circumstances require.

Inapplicable provisions

2(2)        Sections 5 to 9, subsections 10(1) to (3) and (6), sections 12 and 13, subsections 27(3), 45(9) and 101(1), section 115, subsections 126(2) and (3), subsections 167(7), 181(2) and 182(1), and sections 191 and 194 of The Corporations Act, and subsections 26(1) to (12) and any other provisions of that Act to the extent that they relate to stated capital, do not apply to the Fund.

Partially applicable provisions

2(3)        The following provisions of The Corporations Act apply to the Fund in the manner and to the extent indicated:

(a)subsection 19(1) applies with respect to the period following the first meeting of the directors referred to in section 6 of this Act;

(b)subsections 32(2), 33(3) and 34(2), section 38, clauses 113(2)(a) and 113(2)(f), and subsections 184(26) and 234(6) apply with respect to shares other than Class "G" Special Shares;

(c)subsection 97(2) applies to the period after the notice described in subsection 6(2) of this Act is filed with the Director of the Corporations Branch;

(d)subsection 133(1) applies as if the reference to "holders of a majority of the shares entitled to vote" were a reference to "the majority of shareholders entitled to vote".

Conflict of Acts

2(4)        If this Act conflicts with The Corporations Act, this Act prevails.

PART 2

INCORPORATION AND ORGANIZATION

Establishment

3(1)        There is hereby established a corporation, to be known as the Crocus Investment Fund, consisting of the first directors and those persons who, from time to time, are shareholders of the corporation.

Objects of the Fund

3(2)        The business of the Fund is restricted to

(a)the operation of an investment fund that will make investments in qualified Manitoba business entities with a view to earning income and promoting and maintaining

(i)capital retention and economic stability in Manitoba,

(ii)employee ownership of qualified Manitoba businesses, and

(iii)business continuity, job retention and creation, and the ownership of Manitoba businesses by Manitobans; and

(b)providing investment capital and other financial assistance and other services to Manitoba businesses to enable them to create, maintain and protect jobs.

Deemed incorporation under The Corporations Act

3(3)        The Fund is deemed to have been incorporated by the filing of articles of incorporation under The Corporations Act and a certificate of incorporation is deemed to have been issued with respect to it.

Filing further articles

3(4)        Except as provided in this Act, further articles filed by the Fund under The Corporations Act shall not have the effect of amending this Act.

Share capital

4(1)         The Fund is authorized to issue an unlimited number of each of the following classes of shares:

(a)Class "A" Common Shares, Class "I" Special Shares and Class "L" Special Shares, that may be issued for an unlimited consideration; and

(b)Class "G" Special Shares that may be issued for the consideration not exceeding $2,000,000.

Rights set out in Schedule

4(2)        Except as otherwise provided, the rights, privileges, restrictions and conditions attaching to the shares referred to in subsection (1) are as set out in the Schedule to this Act.

Class "G" Special Shares conversion rights

4(3)        The first directors may by articles of amendment amend the rights attaching to the Class "G" Special Shares to provide for the conversion of the shares into debt of the Fund as provided in the agreement entered into between the Fund and the Government of Manitoba for the subscription of those shares.

Additional classes of shares

4(4)        Nothing in this Act precludes the Fund from creating other classes of shares by filing articles of amendment under The Corporations Act.

Limitations on the issue of shares

5(1)        The classes of shares referred to in subsection 4(1) shall be issued as follows:

(a)Class "A" Common Shares shall be issued only to individuals;

(b)Class "G" Special Shares shall be issued only to the Minister of Finance in trust for Her Majesty in right of Manitoba;

(c)Class "I" Special Shares shall be issued only to institutional or corporate investors;

(d)Class "L" Special Shares shall be issued only to the Manitoba Federation of Labour.

Authority to purchase

5(2)        The Minister of Finance is authorized to purchase Class "G" Special Shares with money authorized for the purpose by an Act of the Legislature.

First directors

6(1)        The first directors of the Board shall consist of

(a)three persons appointed by the Manitoba Federation of Labour; and

(b)two persons appointed by the Lieutenant Governor in Council.

Term of office

6(2)        The term of office of the first directors commences when a notice setting out the names, the residence addresses and the occupations of the directors is filed with the Director of the Corporations Branch by the Manitoba Federation of Labour and ends on the conclusion of the first meeting of the shareholders of the Fund at which their replacements are elected.

Composition of Board

7(1)        The Board that is elected by the shareholders shall consist of not less than three and not more than nine directors elected by the shareholders in accordance with this section.

Class "A" Common Shares

7(2)        The holders of issued and outstanding Class "A" Common Shares of the Fund may elect one director.

Class "G" Special Shares

7(3)        Subject to subsection (7), the holder of the issued and outstanding Class "G" Special Shares of the Fund may elect one director.

Class "I" Special Shares

7(4)        The Board may, by resolution designating one or more series of Class "I" Special Shares, provide that the holders of issued and outstanding Class "I" Special Shares of the series may, alone or together with the holders of one or more other series of Class "I" Special Shares, elect up to two directors.

Class "L" Special Shares

7(5)        Subject to subsection (6), the holder of the issued and outstanding Class "L" Special Shares of the Fund may elect three directors.

Matching number of directors

7(6)        The holder of Class "L" Special Shares may elect one additional director for each director that holders of Class "I" Special Shares elect and the additional director shall hold office until the conclusion of the next meeting of the holders of Class "I" Special Shares at which they elect a director.

Appointment of additional directors - Class "G" Special Shares

7(7)        Until the first meeting of shareholders following the issue of Class "A" Common Shares, the holder of the issued and outstanding Class "G" Special Shares may elect two directors to the Board.

Notice of Meetings

8           Unless all the directors of the Fund consent, no meeting of the directors before the election of a director by the holders of Class "A" Common Shares shall be held without at least 14 days written notice to all directors.

Quorum

9           At least one director who is not elected by the holder of Class "L" Special Shares shall be present at any meeting of directors of the Fund held after the election of a director by the holders of Class "A" Common Shares.

Registered Office

10(1)       The initial registered office of the Fund shall be located at such place in the Province of Manitoba as is specified by resolution of the first directors.

Notice to Corporations Branch

10(2)       The Fund shall, within 15 days of the passing of the resolution referred to in subsection (1), file with the Director of the Corporations Branch a notice setting out the place where the registered office of the Fund is located.

PART 3

OPERATION AND ADMINISTRATION

Investment policies and criteria

11(1)       Subject to subsections (2) and (3), the Fund shall by by-law establish from time to time investment policies and criteria with respect to

(a)the promotion of employee ownership and employee participation in corporate governance and management;

(b)the creation, retention or protection of employment in Manitoba;

(c)employment practices, workplace safety, environmental suitability and other matters; and

(d)the composition of the investment portfolio of the Fund in terms of industry sectors, income, growth and risk.

Restrictions

11(2)       In making investments, the Fund shall

(a)invest not less than 60% of its investment assets in eligible investments;

(b)not invest more than 10% of its investment assets in any one qualified Manitoba business entity; and

(c)not prohibit investment in non-unionized and unionized qualified Manitoba business entities and other businesses;

(d)not be used as an instrument for organizing employees into unions; and

(e)use its best efforts to ensure that a majority of its investment assets directly or indirectly promote employee ownership or employee participation in corporate governance and management.

Application of clause (2)(a)

11(3)       Clause (2)(a) does not apply to the Fund until the beginning of the fourth year following the year in which the Fund first issues Class "A" Common Shares.

Reserves

12(1)       The Fund shall maintain a reserve fund equal to the greater of

(a)15% of its investment assets; and

(b)50% of the amount of all outstanding guarantees and securities given by the Fund.

Investment of reserve fund

12(2)       Assets of the Fund held in the reserve fund shall be invested in debt obligations of the Province of Manitoba, municipal governments within Manitoba or Manitoba Crown Corporations or in debt obligations of corporations that carry on business in Manitoba and whose shares are listed on a Canadian stock exchange prescribed for the purposes of section 146 of the Income Tax Act (Canada).

Interpretation of "guarantee" or "security"

12(3)       For the purpose of subsection (1), the amount of the guarantees and securities given by the Fund does not include the amount of any guarantee or security in respect of which the liability of the Fund is limited to the portion of its investment assets comprising its investment in the person for whose benefit the guarantee or security is given.

Prohibited investments

13(1)       Despite any other section of this Act, the Fund shall not invest any of its investment assets in an ineligible investment and shall not enter into any guarantee or security for the obligations of a corporation, partnership or trust if the shares of the corporation or the interests in the partnership or trust would be an ineligible investment if they were acquired by the Fund at the time the guarantee or security is given.

Definition of "ineligible investment"

13(2)       In subsection (1), "ineligible investment" means

(a)an interest in real property, or a debt obligation that is secured by an interest in real property, that is held primarily for

(i)the purpose of gaining or producing gross revenue that is rent,

(ii)the development, subdivision or sale thereof, or

(iii)use in farming;

(b)an interest in, or a debt obligation that is secured by an interest in, a Canadian resource property or a foreign resource property that is held primarily for the purpose of gaining or producing gross revenue that is rent or a royalty;

(c)subject to subsection (4), a share in the capital stock of a corporation, an interest in a partnership or trust or a debt obligation issued by a financial institution other than a debt obligation issued by a financial institution in the ordinary course of business;

(d)a share in the capital stock of a corporation, an interest in a partnership or trust or a debt obligation issued by a corporation, partnership, trust or other person

(i)that carries on the professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian, chiropractor, optometrist, physiotherapist, chiropodist, podiatrist, osteopath, audiologist, speech therapist, occupational therapist, psychologist or other profession prescribed by regulation,

(ii)that carries on the business of exploring for, developing, extracting, processing or distributing petroleum or natural gas,

(iii)that carries on the business of exploring for mineral resources, other than petroleum or natural gas, unless such exploration is carried on as part of a business that includes the development and extraction, processing or distribution of mineral resources,

(iv)the principal asset of which is a farm or the principal business of which is farming,

(v)that carries on the business of leasing, rental, development or sale, or any combination thereof, of real property owned by it, or

(vi)if substantially all of the assets of the corporation, partnership, trust or person are investments of a type referred to in clauses (a) to (c) or subclauses (d)(i) to (v),

but does not include an investment prescribed by regulation.

Definitions

13(3)       For the purposes of the definition of "ineligible investment",

"Canadian resource property" means a Canadian resource property as defined in clause 66(15)(c) of the Income Tax Act (Canada); («avoir minier canadien»)

"financial institution" means a corporation, partnership or trust that

(a)is a bank,

(b)is a credit union,

(c)is authorized under the laws of Canada or a province to carry on the business of offering its services as a trustee to the public,

(d)is authorized under the laws of Canada or a province to carry on the business of insurance,

(e)is a trader or dealer in securities,

(f)has as its principal business the lending of money or of the purchasing of debt obligations or any combination thereof,

(g)has as its principal business earning of gross revenue that is rent, royalties, interest, dividends or gains from the disposition of investments, or

(h)has as its principal businesses any combination of the businesses referred to in clauses (a) to (g); («établissement financier»)

"foreign resource property" means foreign resource property as defined in clause 66(15)(f) of the Income Tax Act (Canada). («avoir minier étranger»)

Exception

13(4)       Where the Fund invests its investment assets or enters into a guarantee or security for the purpose of directly or indirectly promoting employee ownership of a qualified Manitoba business, the definition of "financial institution" shall be read without reference to clause (c) or (d).

Payroll deduction for share purchase

14(1)       Subject to subsection (2), an employer who has been requested to do so in writing by

(a)20% of the Manitoba employees, if the employer has less than 250 Manitoba employees; or

(b)50 Manitoba employees, if the employer has 250 or more Manitoba employees;

shall, for the purpose of facilitating an employee's purchase of Class "A" Common Shares of the Fund, deduct from the salary or wages of any employee who requests that a deduction be made the amount for the number of pay periods specified in writing by that employee.

Notice to terminate deduction

14(2)       If an employee gives notice to an employer in writing that the deduction of amounts from his or her salary or wages referred to in subsection (1) is to cease, the employer shall commencing with the pay period following the giving of the notice cease to make the deduction.

Remittance of deductions

14(3)       The employer shall, not later than the 15th day of the month following the month in which the deduction was made, remit the amounts to the Fund together with a statement specifying the amount deducted in respect of each employee, the employee's name, address, date of birth and social insurance number.

Deemed subscription

14(4)       The amount remitted to the Fund by an employer on behalf of an employee is deemed to be a subscription by the employee for as many Class "A" Common Shares, including fractional shares, as may be purchased with that amount.

Amounts deemed to be salary

14(5)       Until an amount deducted by the employer with respect to an employee under subsection (1) is remitted to the Fund, the amount is, for the purposes of the rights of the employee, deemed to be salary or wages owed by the employer to the employee and, if the employer fails to remit to the Fund any amount so deducted, the employee shall be entitled to enforce the payment to the employee and for that purpose is entitled to all of the rights of employees in respect of the payment of wages or salaries under any Act of the Legislature.

Valuation

15(1)       The fair value of the Class "A" Common Shares of the Fund shall be determined by the Board as at each valuation date.

Asset valuation

15(2)       For the purpose of determining the fair value of the Class "A" Common Shares of the Fund at any valuation date the value of the investments assets of the Fund at that valuation date shall be determined by the Board in accordance with the following rules:

(a)investment assets held by the Fund for which there is a published market value shall be valued at their published market value as at the valuation date;

(b)if, despite the existence of a published market value for particular investment assets of the Fund, in the opinion of the Board investment assets could not readily be disposed of through such market at the valuation date, the Board may adjust the value of those assets to reflect the amount which would likely be realized from their sale;

(c)on each valuation date preceding the first anniversary of the date on which it was acquired by the Fund, an investment asset held by the Fund for which there is no published market value shall be valued at its cost unless the Fund is required by subsection (6) to revalue the assets prior to the expiration of that one year period;

(d)on each valuation date following the first anniversary of the date on which it was acquired by the Fund, each investment asset held by the Fund for which there is no published market value shall be valued at its net realizable value;

(e)assets of the Fund other than investment assets shall be valued at cost less any depreciation applicable to them as determined by the Board in consultation with the auditors of the Fund.

Definition of "net realizable value"

15(3)       In this section, "net realizable value", means the amount which would be received by the Fund from the sale of the investment asset on an orderly basis over a reasonable period of time in an arm's-length sale between the Fund and an informed, knowledgeable and willing purchaser, acting without restraint.

Report of valuation

15(4)       For the purpose of determining the net realizable value of an investment asset, the Board shall cause a person qualified to make an evaluation of the investment asset to prepare a report annually, as at each anniversary date of the acquisition of the investment asset, giving his or her opinion as to the fair value of the investment asset.

Duty of Board in determining value

15(5)       In determining the net realizable value of an investment asset the Board shall have regard to the report under subsection (4), to any other bona fide arm's-length transactions respecting the investment asset which in the opinion of the Board provide a valid indication of the net realizable value of the investment asset and to such other factors as the by-laws of the Fund may provide.

Revaluation

15(6)       If on any valuation date the Board determines that there has been a material change which may have an effect on the value of any investment asset of the Fund, the Board shall cause a revaluation of the investment asset or investment assets affected by the material change as at that valuation date.

Duty of the Board in determining value

15(7)       Subject to subsection (8), for the purpose of assisting it in determining the value of the Class "A" Common Shares at a valuation date, the Board shall cause a person qualified to make an evaluation of the Fund to prepare a report stating his or her opinion as to the value of the Class "A" Common Shares at such valuation date on the assumption that the values of the investment assets of the Fund at that valuation date are the values determined in accordance with the rules set out in subsection (2).

Exception

15(8)       If on any valuation date the board determines that since the preceding valuation date there has been no change in the assets or liabilities of the Fund which could have a material effect upon the value of the Class "A" Common Shares of the Fund the Board may dispense with the preparation of the report required by subsection (7).

PART 4

CONFLICT OF INTEREST

Definitions

16          In this Part,

"dependent" means

(a)the spouse of a director or officer, including a person who is not married to the director or officer but whom the director or officer represents as the spouse,

(b)any child or grandchild of the director or officer whether or not the child or grandchild resides with the director or officer, or

(c)a parent, brother or sister of the director or officer; («personne à charge»)

"director or officer" means a director or officer of the Fund; («administrateur ou dirigeant»)

"pecuniary interest" includes a pecuniary liability. («intérêt financier»)

Application

17          For purposes of this Part, a director or officer or a dependent of a director or officer does not have a direct or indirect pecuniary interest in an entity or organization unless the value of the pecuniary interest is more than $500.

Disqualification of directors and officers

18(1)       Subject to subsection (2), a director or officer or a dependent of a director or officer who has a direct or indirect pecuniary interest in an entity or organization in which the Fund has a direct or indirect pecuniary interest is disqualified from holding office.

Exception

18(2)       Subsection (1) does not apply in respect of a director or officer or a dependent of a director or officer who has a direct or indirect pecuniary interest in an entity or organization, in which the Fund has a direct or indirect pecuniary interest

(a)that arises by reason only of membership by the director or officer or a dependent of a director or officer in, or employment of the director or officer or a dependent of the director or officer by, a labour union that has a collective agreement with the entity or organization;

(b)if the person in respect of whom subsection (1) would be applicable was not a director or officer at the time that the direct or indirect pecuniary interest of the Fund arose or for a period of one year thereafter; or

(c)that arises by reason only of a director or officer or a dependent of a director or officer having a deposit in, or a consumer loan or residential mortgage with, a bank or credit union in which the Fund has a direct or indirect pecuniary interest.

Obligations of directors and officers during meetings

19(1)       Where during a meeting of the Board there arises a matter involving an entity or organization in which

(a)a director or officer or a dependent of a director or officer, who is not otherwise disqualified from holding office under section 18, has a direct or indirect pecuniary interest; and

(b)the Fund has or may have a direct or indirect pecuniary interest;

the director or officer shall

(c)disclose the general nature of that direct or indirect pecuniary interest;

(d)withdraw from the meeting without voting or participating in the discussion; and

(e)refrain at all times from attempting to influence the matter.

Absence from meeting

19(2)       A director or officer who is absent from a meeting and is therefore unable to comply with subsection (1) shall

(a)disclose the general nature of the direct or indirect pecuniary interest at the next meeting of the Board; and

(b)refrain at all times from attempting to influence the matter.

Record of disclosure

19(3)       Where a director or officer complies with subsection (1) or (2), the secretary of the meeting shall record in the minutes of that meeting of the Board

(a)the disclosure;

(b)the general nature of the direct or indirect pecuniary interest disclosed; and

(c)the withdrawal of the director or officer from the meeting.

Quorum

20          Despite the provisions of any Act of the Legislature, rule of procedure or by-law of the Fund, where, by reason of withdrawals from a meeting of the Board under section 19, the number of directors remaining at the meeting is not sufficient to constitute a quorum, the remaining directors, if not fewer than three, are, subject to section 9, deemed to constitute a quorum for the purposes of discussing and voting on a matter referred to in section 19.

Acts of the Fund not invalid

21          Participation in or voting at a meeting by a director or officer who is disqualified under section 18, or by a director or officer who has failed to comply with section 19, does not of itself invalidate

(a)any contract or other pecuniary transaction; or

(b)any procedure undertaken by the Fund with respect to a contract or other pecuniary transaction;

to which the participation or vote relates, but the transaction or procedure is voidable at the instance of the Fund before the expiration of two years from the date of the decision authorizing the transaction except as against an entity or organization acting in good faith and without actual notice of the participation or vote.

Non-compliance

22          Where, on application by a director, officer, shareholder or other interested party, it is alleged that a director or officer is disqualified from office under section 18 or has failed to comply with section 19, the Court of Queen's Bench may make an order that the director or officer be disqualified from holding office.

PART 5

REGULATIONS

Regulations

23          The Lieutenant Governor in Council may make regulations

(a)prescribing professions for the purpose of clause (d)(i) of the definition of "ineligible investment" in subsection 13(2); and

(b)prescribing investments for the purposes of the definition of "ineligible investment" in subsection 13(2).

PART 6

CONSEQUENTIAL AMENDMENTS AND COMING INTO FORCE

C.C.S.M. c. I10 amended

24           The Income Tax Act is amended by adding the following after section 11:

Interpretation

11.1(1)     In this section,

"annual approved share limit" in respect of a labour sponsored venture capital corporation means $15,000,000. or such greater amount as may be prescribed in respect of the corporation; («plafond annuel»)

"approved share" means a prescribed share of a prescribed labour sponsored venture capital corporation acquired by an individual where the individual is or will be the first person, other than a broker or dealer in securities, to be a registered holder thereof; («action approuvée»)

"labour-sponsored funds tax credit" means 20% of the aggregate of all amounts in respect of an approved share acquired or irrevocably subscribed and paid for by the taxpayer in the year or within 60 days after the end of the year (to the extent that it was not included in computing the labour-sponsored funds tax credit of the taxpayer for the immediately preceding year) each of which amounts is the lesser of

(a)the net cost of the approved share to the taxpayer, and

(b)the amount designated by the labour sponsored venture capital corporation in respect of the share; («crédit d'impôt relatif à un fonds de travailleurs»)

"net cost" to an individual of an approved share means the amount, if any, by which

(a)the amount of the consideration paid by the individual to acquire or subscribe for the share

exceeds

(b)the amount of any assistance (other than an amount included in computing a tax credit of the individual in respect of that share) provided or to be provided by a government, municipality, or any public authority in respect of or for the acquisition of, the share. («coût net»)

Labour sponsored funds tax credit

11.1(2)     There may be deducted from the tax otherwise payable under this Act for a taxation year by a taxpayer who is an individual an amount equal to the lesser of $700. and the taxpayer's labour-sponsored funds tax credit for the year.

Proof of credit

11.1(3)     An individual is not entitled to a credit under this section unless the amount designated in respect of each approved share for which a credit is claimed is proven by filing with the minister a receipt in prescribed form setting out the amount designated in respect of the share under this section.

Designation of credit

11.1(4)     A corporation that issues an approved share shall designate for the purposes of this section, in the prescribed form and manner, an amount in respect of the share, not exceeding the consideration for which the share was issued.

Limitation on amount designated

11.1(5)     The aggregate of the amounts designated by a corporation for a taxation year in respect of approved shares purchased or subscribed for by a taxpayer shall not exceed $3,500.

Excess designation

11.1(6)     A corporation that designates under subsection 11.1(4) an amount for the year exceeding its annual approved share limit for the year is liable to pay a tax equal to 20% of the excess.

Return and payment of tax

11.1(7)     A corporation liable to pay a tax under subsection (6) in respect of a year shall, not later three months after the end of the year,

(a)file with the minister a return for the year under this section in prescribed form and containing prescribed information, without notice or demand therefor;

(b)estimate in the return the amount of tax payable by it under subsection (6) for the year; and

(c)pay to the treasurer the tax payable by it under this section for the year.

Application

11.1(8)     This section shall be applicable to 1992 and subsequent taxation years.

C.C.S.M. reference

25          This Act may be cited as The Manitoba Employee Ownership Fund Corporation Act and referred to as chapter E95 of the Continuing Consolidation of the Statutes of Manitoba.

Coming into force

26          This Act comes into force on a day fixed by proclamation.

SCHEDULE

SHARE CONDITIONS (Subsection 4(3))

Shareholder voting

1(1)        A holder of Class "A" Common Shares, Class "G" Special Shares and Class "L" Special Shares shall be entitled to one vote at any meeting of shareholders of the Fund at which holders of that class of shares are entitled to vote, without regard to the number of shares owned by the holder.

1(2)        A holder of Class "I" Special Shares of a series shall only be entitled to vote in accordance with the voting rights attaching to such series of Class "I" Special Shares as established by the Board at the time of their issue.

1(3)        The voting rights established by the Board in respect of a series of Class "I" Special Shares shall provide that the holder is limited, except in respect to election of directors, if any, in which that series is entitled to participate, to one vote at any meeting of shareholders of the Fund at which holder of Class "I" Special Shares series is entitled to vote, without regard to the number of shares owned by the holder.

Distributions on dissolution or liquidation

2(1)        Subject to the rights of the holders of the Class "I" Special Shares, on the liquidation, dissolution or winding-up of the Fund, the holder of Class "G" Special Shares and the holder of Class "L" Special Shares shall receive rateably, share for share, without preference or distinction the amount paid by them for the Class "G" Special Shares and Class "L" Special Shares, respectively, before any further property or assets of the Fund are distributed and, thereafter, subject to the rights of the Class "I" Special Shares, the holders of the Class "A" Common Shares shall be exclusively entitled to receive rateably, share for share, any remaining property or assets of the Fund.

2(2)        The holders of Class "I" Special Shares shall be entitled to share in the assets of the Fund on the liquidation, dissolution or winding-up of the Fund in accordance with the rights and any sinking fund or other provisions specified by the Board as permitted by section 4 of this Schedule.

Dividend rights

3(1)        The holders of Class "A" Common Shares shall be entitled to receive non-cumulative dividends in an amount determined by the Board from time to time.

3(2)        The holder of Class "G" Special Shares shall not be entitled to receive dividends.

3(3)        The holders of the Class "I" Special Shares shall be entitled to receive dividends in accordance with the rights specified by the directors of the Fund as permitted by section 4 of this Schedule.

3(4)        The holder of Class "L" Special Shares shall not be entitled to receive dividends.

Rights, privileges, restrictions and conditions attaching to Class "I" Special Shares

4(1)        The Class "I" Special Shares may at any time and from time to time be issued in one or more series.

4(2)        The Board may fix before issue the number of Class "I" Special Shares in each series, the designation, rights, privileges, restrictions and conditions attaching to the Class "I" Special Shares of each series, including, without limitation, any voting rights, any right to receive dividends, which may be cumulative or non-cumulative and variable or fixed and may include provision for the means of determining the amount of such dividends or the dates of payment thereof, any terms and conditions of redemption or purchase, any conversion rights, any rights on the liquidation, dissolution or winding-up of the Fund, any sinking fund provisions, any restrictions on transfer and other provisions not inconsistent with this Act.

4(3)        The Class "I" Special Shares of each series may, with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, have such preferences over the Class "I" Special Shares of every other series and be entitled to such preference over the Class "A" Common Shares, Class "G" Special Shares and Class "L" Special Shares as the directors may fix before the issue thereof.

4(4)        Upon the creation of any series of Class "I" Special Shares, articles of amendment setting forth the rights, privileges, restrictions and conditions attaching to the Class "I" Special Shares of the series shall be filed under The Corporations Act.

Restrictions on transfer of shares

5(1)        Class "A" Common Shares may not be transferred by the holder except by way of

(a)a transfer by an individual to the trustee of a Registered Retirement Plan under which the individual or the spouse of the individual is the annuitant;

(b)a transfer by an individual to his or her spouse or former spouse;

(c)a transfer between an individual and his or her child, parent, brother or sister;

(d)a transfer to the executors, administrators or heirs of an individual as a consequence of the death of the individual or the transfer by the executors or administrators of an individual to the heirs of the individual;

(e)a transfer to the Fund upon the repurchase of the holder's Class "A" Common Shares by the Fund; or

(f)a transfer upon the expiration of such minimum period of ownership of the Class "A" Common Share by the holder thereof as may be established in the by-laws of the Fund, not to be less than 7 years; or

(g)a transfer upon the occurrence of an event of severe financial hardship in respect of the holder of the Class "A" Common Share.

5(2)        Class "G" Special Shares may not be transferred by the holder thereof without the prior approval of the Lieutenant Governor in Council.

5(3)        Class "I" Special Shares may not be transferred if such transfer is in contravention of the restrictions on transfer, if any, specified by the directors of the Fund as permitted by section 4 of this Schedule.

5(4)        Class "L" Special Shares may not be transferred by the holder without the prior approval of the Lieutenant Governor in Council.

Repurchase of Class "A" Common Shares and Class "L" Special Shares

6(1)        The holder of a Class "A" Common Share shall be entitled to require the Fund to purchase all or part of the holder's Class "A" Common Shares of the Fund on or after

(a)the holder's 60th birthday, if the holder of the shares is retired at the date upon which the shares are to be repurchased and gives one year's notice; and

(b)the holder's 65th birthday, whether or not the holder of the shares is retired at the date upon which the shares are to be repurchased, if the holder gives one year's notice;

(c)the death of the original holder of the shares and the receipt of a request for repurchase thereof from the person who has acquired the shares as a consequence of the death of the original holder;

(d)the expiration of such minimum period of ownership of the Class "A" Common Share by the holder thereof as may be established in the by-laws of the Fund, not to be less than seven years; or

(e)the occurrence of an event of severe financial hardship in respect of the holder of the Class "A" Common Share.

6(2)        The holder of a Class "A" Common Shares shall be entitled from time to time to require the Fund to purchase any of the holder's Class "A" Common Shares of the Fund within 60 days after the date upon which such shares were issued to the holder.

6(3)        Subject to the provisions of The Corporations Act, the Fund shall repurchase the holder's Class "A" Common Shares on the valuation date immediately following the date upon which a request for their repurchase is tendered on the Fund.  If on any valuation date the Fund is not able to repurchase all of the shares for which it has received requests for repurchase, then the Fund shall repurchase rateably amongst the requests it has received, as many of the Class "A" Common Shares as it is lawfully entitled to repurchase, and the balance of shares for which it has received such a request shall be considered to have been tendered for repurchase at the immediately following valuation date.

6(4)        On any valuation date, the repurchase price of a Class "A" Common Share shall be

(a)if the repurchase is pursuant to a request made within 60 days after the date upon which a share is issued, the amount of the consideration for which the Class "A" Common Share was issued; and

(b)in any other case, the fair value of a Class "A" Common Share on the valuation date as determined by the Board of the Fund.

6(5)        The Fund shall not purchase, redeem or otherwise acquire any of its issued Class "L" Special Shares.

Interpretation

7(1)        For the purposes of clauses 5(1)(g) and 6(1)(d) of this Schedule, where a Class "A" Common Share has been acquired by the holder from another person pursuant to the provisions of section 5 of this Schedule, the period of ownership of a Class "A" Common Share by the holder shall be deemed to include any period during which the share was owned by the person from whom the holder acquired the share.

7(2)        For the purpose of clauses 5(1)(g) and 6(1)(e) of this Schedule, the occurrence of an event of severe financial hardship means a period of involuntary loss or interruption of employment which is not compensated through unemployment insurance benefits or workers compensation benefits.

7(3)        For the purposes of clauses 5(1)(g) and 6(1)(e) of this Schedule, where a Class "A" Common Share has been acquired by the holder from another person pursuant to the provisions of section 5 of this Schedule, the "occurrence of an event of severe financial hardship" affecting the person from whom the share was acquired shall be deemed to be the occurrence of an event of severe financial hardship affecting the holder.

7(4)        The by-laws of the Fund may establish conditions precedent to the right of a holder of Class "A" Common Shares to redeem a Class "A" Common Share upon the occurrence of an event of severe financial hardship.