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The Manitoba Employee Ownership Fund Corporation Amendment Act

This is an unofficial version.
If you need an official copy, contact Statutory Publications.

S.M. 1997, c. 40

THE MANITOBA EMPLOYEE OWNERSHIP FUND CORPORATION AMENDMENT ACT


 

(Assented to June 28, 1997)

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

C.C.S.M. c. E95 amended

1 The Manitoba Employee Ownership Fund Corporation Act is amended by this Act.

2         Subsection 1(1) is amended by adding the following definition in alphabetical order:

"qualifying trust" means a qualifying trust as defined in section 11.1 of The Income Tax Act; (« fiducie admissible »)

3         Subsection 2(2) is amended

(a) by striking out "and 101(1), section 115, subsections 126(2) and (3), subsections" and substituting ", 101(1), 126(2) and (3),"; and

(b) by striking out ", and subsections 26(1) to (12) and any other provisions of that Act to the extent that they relate to stated capital,".

4         The following is added after subsection 4(4):

Reduction of stated capital

4(5)      The Fund shall not reduce the stated capital in respect of its Class "A" Common Shares otherwise than on a redemption, acquisition or cancellation of shares of that class by the Fund or under prescribed circumstances.

5         Clause 5(1)(a) is amended by adding "and qualifying trusts for individuals" after "individuals".

6(1)      Subsection 7(1) is amended by striking out "nine" and subsituting "11".

6(2)      Subsection 7(2) is amended by striking out "one director" and substituting "two directors".

6(3)      Subsection 7(4) is amended by striking out "up to two directors" and substituting "one director".

6(4)      Subsection 7(5) is amended by striking out "three" and substituting "four".

6(5)      Subsection 7(6) is repealed and the following is substituted:

Matching number of directors

7(6)      The holder of the Class "L" Special Shares of the Fund may elect one additional director for each director elected by the holders of the Class "I" Special Shares or appointed by the Board, and each such additional director shall hold office until the conclusion of the next meeting at which a director is elected by the holders of the Class "I" Special Shares or appointed by the Board.

Board may appoint independent director

7(6.1)    In addition to the directors elected by the shareholders of the Fund, the Board may appoint as a director one individual who

(a) is not an officer or employee of the Fund;

(b) is not a director, officer or employee of the holder of the Class "L" Special Shares or the Government of Manitoba; and

(c) is not a director, officer, employee, member or shareholder of any firm or corporation that is engaged to provide services to the Fund.

7         The following is added after section 9:

Investment advisory committee

9.1(1)    The Fund shall establish an investment advisory committee to advise the Board regarding the financial merits of proposed acquisitions of eligible investments.

Composition of committee

9.1(2)    The investment advisory committee shall consist of a minimum of five persons,

(a) one of whom shall be appointed by the Board from among its members to chair the committee;

(b) a majority of whom shall be selected and appointed by the Fund from a list of nominees approved by the Board for their experience or expertise in a particular business sector or in the management of investments; and

(c) a majority of whom shall not be employees, directors or officers of the Fund.

Conflict of interest

9.1(3)    A member of the investment advisory committee who has a material interest in a proposed investment by the Fund that is under consideration by the committee

(a) shall disclose the nature and extent of his or her interest in writing to the committee

(i) at or before the meeting of the committee at which the proposed investment is first considered,

(ii) if the member did not then have an interest in the proposed investment, at the first meeting after he or she becomes interested in it, or

(iii) if the member had an interest in the proposed investment before becoming a member, at the first meeting after he or she becomes a member at which the proposed investment is considered; and

(b) thereafter shall not participate in the committee's deliberations or advice to the Board regarding the proposed investment.

Committee to advise Board

9.1(4)    The Fund shall provide the particulars of each proposed acquisition of an eligible investment to the investment advisory committee, and the committee shall advise the Board regarding the financial merits of the proposed acquisition.

Board to consider committee's advice

9.1(5)    Before approving the acquisition of an eligible investment, the Board shall consider the investment advisory committee's advice regarding the investment.

8         The following is added after section 11:

Notice of intent to declare investment not eligible

11.1(1)   Where an investment of the Fund ceases, as part of a series of transactions or events in the course of which it was acquired by the Fund, to be an eligible investment and, in the minister's opinion, the Fund made the investment contrary to the object and spirit of this Act, the minister may, by written notice to the Fund within two years after the day that it came to the minister's attention that the investment ceased to be an eligible investment, propose that the investment be declared not to be an eligible investment.

Objection

11.1(2)   The Fund may, within 30 days after receiving a notice under subsection (1), object to the proposed declaration by filing a written notice of objection with the minister setting out the relevant facts and its reasons for the objection.

Action of minister

11.1(3)   Where the minister has made a proposal under subsection (1) in respect of an investment, the minister may, after considering any objection made under subsection (2),

(a) abandon the proposal; or

(b) declare the investment not to be an eligible investment;

and shall give the Fund written notice of the decision.

Effect of declaration

11.1(4)   For the purpose of applying subsection 11(2) at any time after an investment is declared by the minister not to be an eligible investment, the investment is deemed never to have been an eligible investment.

Minister's declaration final

11.1(5)   A declaration under subsection (3) by the minister is final and is not subject to appeal.

9         Subsection 12(2) is repealed and the following is substituted:

Investment of reserve fund

12(2)     The Fund shall invest the assets of its reserve fund in

(a) money on deposit with a bank to which the Bank Act (Canada) applies, a credit union or caisse populaire to which The Credit Unions and Caisses Populaires Act applies or a trust company that is incorporated under the laws of Canada or of a province of Canada and carries on the business of a trust company in Manitoba;

(b) guaranteed investment certificates issued by a bank, credit union, caisse populaire or trust company referred to in clause (a);

(c) debt obligations of

(i) the Province of Manitoba,

(ii) municipal governments within Manitoba,

(iii) Manitoba crown corporations, or

(iv) 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);

(d) prescribed investments; or

(e) any combination of investments referred to in clause (a), (b),  (c) or (d).

10(1)      Subsection 13(1) is amended by striking out "Despite any other section of this Act," and substituting "Despite any other provision of this Act, unless authorized in writing by the minister".

10(2)     Subsection 13(2) is repealed and the following is substituted:

Ineligible investments

13(2)     For the purpose of subsection (1), "ineligible investment" means an ineligible investment as defined in the regulations.

11        Subsection 15(7) is amended by striking out "subsection (2)" and substituting "this section".

12        Part 4 is repealed.

13        Clauses 23(a) and (b) are repealed and the following is substituted:

(a) for the purpose of subsection 4(5), prescribing the circumstances in which the stated capital of the Fund may be reduced;

(b)  for the purpose of clause 12(2)(d), prescribing investments in which the Fund may invest its reserve fund;

(c) defining "ineligible investment" for the purpose of section 13;

(d) respecting any other matter that the Lieutenant Governor in Council considers necessary for carrying out the purposes of this Act.

14        Subsection 2(3) of the Schedule is repealed and the following is substituted:

Definitions

2(3)      In this section,

"Class "G" liquidation entitlement" means Class "G" liquidation entitlement as defined in the articles of the Fund as amended from time to time under The Corporations Act and subsection 4(3) of this Act; (« part de liquidation relative à la catégorie "G" »)

"Class "L" liquidation entitlement", in relation to a Class "L" Special Share, means the amount paid by the holder for the issue of the share. (« part de liquidation relative à la catégorie "L" »)

15        Subsection 5(1) of the Schedule is amended

(a) in clause (a), by striking out everything after "trustee" and substituting "under a qualifying trust for the individual;";

(b) by adding the following after clause (b);

(b.1) a transfer by a qualifying trust for an individual

(i) to the individual,

(ii) to the spouse or a former spouse of the individual,

(iii) to a qualifying trust for the spouse or former spouse,

(iv) to a child, parent, brother or sister of the individual, or

(v) as a consequence of the death of the individual, to the executors, administrators or heirs of the individual or to a designated beneficiary of the trust;

(c) by repealing clauses (f) and (g) and substituting the following:

(f) a transfer that occurs on or after

(i) the seventh anniversary of the date the shares were issued, if the shares were issued or irrevocably subscribed and paid for before June 1, 1997, and

(ii) in any other case, the eighth anniversary of the date the shares were issued,

or any later date determined in accordance with the by-laws of the Fund; or

(g) a transfer necessitated by the occurrence of an event of severe financial hardship in respect of

(i) the holder of the shares, or

(ii) if the holder is a qualifying trust for an individual, the individual.

16        Subsection 6(1) of the Schedule is amended

(a) by repealing clause (a) and substituting the following:

(a) the fourth anniversary of the date the shares were issued if

(i) the individual to whom or to whose qualifying trust the shares were issued

(A) has reached his or her 60th birthday and is retired on the day the shares  are to be repurchased, or

(B) has reached his or her 65th birthday on the day the shares are to be repurchased, and

(ii) the individual or the qualifying trust acquired or irrevocably subscribed and paid for the shares before June 1, 1997;

(b) by repealing clauses (c) and (d) and substituting the following:

(c) the day the shares are acquired by the holder who acquired them as a consequence of the death of the individual to whom or to whose qualifying trust the shares were issued;

(d) the day that is

(i) the seventh anniversary of the date the shares were issued, if they were issued or irrevocably subscribed and paid for before June 1, 1997, and

(ii) the eighth anniversary of the date the shares were issued, in any other case,

or any later date determined in accordance with the by-laws of the Fund; or

17        Subsection 7(1) of the Schedule is repealed.

Coming into force

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