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S.M. 1991-92, c. 47

Bill 73, 2nd Session, 35th Legislature

The Rural Development Bonds Act

Table of contents

(Assented to July 26, 1991)

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

PART 1

DEFINITIONS, INTERPRETATION AND APPLICATION

Definitions

1(1)

In this Act,

"bond corporation" means a rural development bond corporation incorporated in accordance with Part 2; («corporation émettrice d'obligations »)

"court" means the Court of Queen's Bench; («tribunal»)

"distribute", when used with reference to rural development bonds, means sell, dispose of or otherwise deal in or offer for sale or solicit in respect of, a rural development bond, whether or not for valuable consideration; («placer auprès du public»)

"eligible business" means a corporation that meets the prescribed criteria; («entreprise admissible»)

"head office", when used with reference to a corporation other than a bond corporation, means the place where

(a) all or substantially all of the collective executive, corporate planning, senior administration, if any, and general management functions of the corporation are located, and

(b) the offices, if any, at which persons carrying out the functions of the chief executive officer, chief operating officer, chief financial officer, president, all or substantially all other executive officers, senior officers and other persons carrying out the functions mentioned in clause (a), are located; («siège social»)

"initial distribution", when used with reference to the distribution of rural development bonds, means distribution to the public of rural development bonds not previously distributed to the public; («premier placement auprès du public»)

"investment pool development bond" means a rural development bond, the proceeds of which are to be invested in eligible businesses whose identity is to be determined subsequent to the approval by the review committee of the issue and distribution of that bond; («obligation de fonds commun de placement»)

"minister" means the member of the Executive Council charged by the Lieutenant Governor Council with the administration of this Act; («ministre »)

"municipality" includes a local government district, an incorporated community under The Northern Affairs Act and, in Northern Manitoba other than in an incorporated community, the Minister of Northern Affairs exercising the powers, rights, privileges and duties that a municipality has within its boundaries under subsection 5(1) of The Northern Affairs Act; («municipalité»)

"Northern Manitoba" means Northern Manitoba as defined in The Northern Affairs Act; («Nord»)

"offering memorandum" means an offering memorandum that is approved under this Act with respect to the initial distribution of rural development bonds; («notice d'offre»)

"prescribed" means prescribed by regulation;

"project development bond" means a rural development bond, the proceeds of which are to be invested in an eligible business whose identity is known at the time of approval by the review committee of the issue and distribution of that bond; («obligation de projet»)

"review committee" means the Rural Development Bonds Review Committee established under section 14; («Comité d'examen»)

"rural development bond" means a rural development bond referred to in section 10; («obligation de développement rural»)

"sponsoring corporation" means a corporation

(a) incorporated under Part XXI of The Corporations Act, or

(b) of a class designated by regulation. («corporation promotrice»)

Meaning of "eligible bondholder"

1(2)

For the purposes of this Act, each of the following is an eligible bondholder of a rural development bond:

(a) an individual who is resident in Manitoba at the time of becoming a holder;

(b) a trust, if at the time of becoming a holder

(i) the trustee is, or a majority of the trustees are, resident in Manitoba, or

(ii) the beneficiary is, or a majority of the beneficiaries are, resident in Manitoba;

(c) a corporation that at the time of becoming a holder

(i) has its head office in Manitoba, and

(ii) is incorporated or continued by or under an Act of the Legislature or under the Canada Business Corporations Act;

(d) a municipality in Manitoba;

(e) the spouse, child or parent of an individual described in clause (a) to whom that individual transfers the rural development bond;

(f) any person to whom the personal representative of a deceased individual described in clause (a) transfers the rural development bond;

(g) a creditor or any person to whom a rural development bond is transferred

(i) under an agreement in which the rural development bond is security for the performance of an obligation, or

(ii) under an order of a court;

(h) any person to whom a rural development bond is transferred by a person described in clause (e), (f) or (g) and any subsequent transferee of that person.

APPLICATION

Application of C.C.S.M c. C225

2(1)

Except as otherwise provided in this Act and the regulations, the provisions of The Corporations Act respecting corporations with share capital apply to bond corporations.

Application of C.C.S.M c. S50

2(2)

Except as otherwise provided in this Act and the regulations, The Securities Act applies with respect to rural development bonds and transactions under this Act.

PART 2

INCORPORATION OF RURAL DEVELOPMENT BOND CORPORATIONS

ARTICLES

Articles of incorporation

3(1)

The articles of incorporation of a bond corporation shall, in addition to the requirements of subsection 6(1) of The Corporations Act,

(a) set out a name for the bond corporation that includes the words "rural development bond corporation";

(b) state that the business of the corporation is restricted to raising capital by means of the sale of rural development bonds and the investment of the proceeds in eligible businesses and such other matters as are necessary or incidental to the carrying on of that business in accordance with this Act and the regulations;

(c) state the name of the municipality in which the registered office and head office of the corporation are to be located;

(d) state that one director is to be a young entrepreneur who shall be not more than 30 years of age;

(e) if any incorporator is a sponsoring corporation, state that at least one director is to be appointed by the sponsoring corporation from among its directors;

(f) if no incorporator is a sponsoring corporation, state that at least one director is to be appointed

(i) from among the members of the council of the municipality in which the head office of the corporation is to be located, or

(ii) if the head office is to be located in Northern Manitoba other than in an incorporated community, by the Minister of Northern Affairs;

(g) state that the director appointed under clause (e) or (f) is to be a signing officer of the corporation;

(h) state that all directors are to be residents of Manitoba;

(i) name a minimum of six directors;

(j) state that at least one director is to be female and at least one is to be male;

(k) state that a person who

(i) owns or controls more than 10% of the voting shares of an eligible business in which the proceeds of a rural development bond are invested, or

(ii) in the six month period preceding the investment of the proceeds of a rural development bond in the eligible business, owned or controlled more than 10% of the voting shares of that eligible business,

is disqualified from being a director or officer of the bond corporation;

(l) state that the issue, transfer and ownership of shares of the corporation are restricted by this Act and the regulations; and

(m) set out any prescribed matter.

Residence of incorporators

3(2)

No individual shall be an incorporator of a bond corporation unless he or she is a resident of the municipality in which the corporation is to have its head office or of a nearby municipality.

Disqualification of incorporators etc.

3(3)

The City of Winnipeg shall not be an incorporator or be entitled to appoint a director to the board of directors of a bond corporation.

Restriction

3(4)

A bond corporation shall not be incorporated for the purpose of investment in, and shall not invest in, a business that is or is to be located within the boundaries of the City of Winnipeg.

Approval of minister

4(1)

No articles of a bond corporation shall be accepted for filing by the Director of the Corporations Branch without the approval of the minister.

Approval of municipality

4(2)

If none of the incorporators of a bond corporation is a sponsoring corporation, no articles of incorporation shall be accepted for filing by the Director of the Corporations Branch without the approval

(a) of the council of the municipality in which the head office of the corporation is to be located; or

(b) if the head office is to be located in Northern Manitoba other than in an incorporated community, of the Minister of Northern Affairs.

Prohibited corporate names

5(1)

No corporation, other than a corporation incorporated in accordance with this Act, shall have a name that includes the words "rural development bond corporation" or any similar words that suggest that the corporation is one to which this Act applies.

Prohibited business names

5(2)

No business, other than a corporation incorporated in accordance with this Act, shall have a business name that includes the words "rural development bond" or any similar words that suggest that the business is one to which this Act applies.

RESTRICTIONS AND LIABILITIES

Limitations on corporations

6

No bond corporation shall, without the consent of the minister,

(a) borrow on the credit of the corporation;

(b) mortgage, hypothecate, pledge or create a security interest in any property of the corporation; or

(c) do any other prescribed thing.

Liabilities of directors of bond corporation

7(1)

Despite The Corporations Act, a director of a bond corporation is not liable under section 113 or subsection 117(1) of that Act, if that director votes for or consents to a resolution or exercises his or her powers or discharges his or her duties for the purpose of satisfying a condition imposed with respect to an approval by the review committee under Part 4.

Liabilities of directors of eligible business

7(2)

Where the review committee, as a condition of an approval under Part 4, requires that an eligible business appoint a director of a bond corporation to be a director of the eligible business, that director is not liable

(a) despite any Act of the Legislature, for any debt or liability of the eligible business; or

(b) under any rule of law imposing a fiduciary or other duty on him or her with respect to the disclosure of confidential information received in the course of acting as a director of the eligible business, if that information is disclosed in good faith to the board of directors or shareholders of the bond corporation or to the Government of Manitoba for the purpose of protecting its interests.

FEES

No fees to be paid

8

No fees are payable under The Corporations Act for any service performed or for any document filed or issued in respect of a bond corporation.

REGISTER

Register

9(1)

The minister shall maintain a register listing the names of all bond corporations.

Documents to be filed

9(2)

A bond corporation shall file with the minister a copy of such documents as may be prescribed within such time as may be prescribed.

Inspection of register and documents

9(3)

The register under subsection (1) and the documents filed under subsection (2) shall be open to public inspection during normal business hours.

PART 3

RURAL DEVELOPMENT BONDS AND GOVERNMENT GUARANTEES

BOND REQUIREMENTS

Form and content of bond

10(1)

Subject to this section and section 11, a rural development bond shall be in the prescribed form and shall contain such terms and conditions as are required by regulation.

Maximum full term and early term

10(2)

A rural development bond shall have

(a) an initial term of five years; and

(b) an extended term of 10 years;

from the closing date of the initial distribution of that bond.

Bond provisions

11

A project development bond shall contain the following provisions:

(a) a provision that permits the bondholder, at any time after the expiration of two years from the closing date of the initial distribution, following approval of the review committee under section 29 and subject to such conditions as that committee considers advisable, to convert or exchange the bond for securities of the eligible business in which the proceeds of the sale of the bond were invested by the bond corporation;

(b) a provision that permits the bondholder to elect in the prescribed manner, not later than three months before the expiration of the initial term of the bond, to do one of the following on the expiration of that term:

(i) to redeem the bond,

(ii) to convert or exchange the bond for securities of the eligible business in which the proceeds of the sale of the bond were invested by the bond corporation in accordance with such terms and conditions as are set out in the bond, or

(iii) to renew the bond for a further term ending on the expiration of the extended term,

and provides that, in default of such an election, the bondholder is deemed to have elected to renew the bond under subclause (iii);

(c) a provision that permits the bondholder to elect, in the prescribed manner not later than three months before the expiration of the extended term, to do one of the following on the expiry of the extended term:

(i) to redeem the bond, or

(ii) to convert or exchange the bond into voting shares of the eligible business in which the proceeds of the sale of the bond were invested by the bond corporation in accordance with such terms and conditions as are set out in the bond,

and provides that, in default of such an election, the bondholder is deemed to have elected to redeem the bond;

(d) a provision setting out the rights, privileges, restrictions and conditions attaching to the development bond;

(e) a provision that requires the bond corporation to repay on a pro rata basis the proceeds of the sale of rural development bonds that are not committed to an eligible business by the bond corporation within the 12 month period following the closing date of the initial distribution of the bonds;

(f) a provision that requires a bond corporation that withdraws or retracts, or divests itself of, its investment in the eligible business in which the proceeds of the rural development bonds were invested, to repay pro rata the principal amount of the rural development bonds, without delay, to the bondholders.

GUARANTEES

Payment on guarantee

12(1)

Subject to subsections (2) and (3), where a rural development bond is guaranteed under subsection 16(3), the Government of Manitoba is liable to pay in respect of that bond the loss sustained by the eligible bondholder in an amount not exceeding the principal amount of the rural development bond.

Payment in certain circumstances

12(2)

The Government of Manitoba shall pay on its guarantee of a rural development bond held by an eligible bondholder, if

(a) the bond is a project development bond and

(i) proceedings by or in respect of the eligible business have been taken under the Bankruptcy Act (Canada) by way of assignment or petition and a receiving order has been made and has become final,

(ii) proceedings have been taken by way of winding up the eligible business and a winding up order has been made,

(iii) a receiver-manager has been appointed in respect of the eligible business,

(iv) a resolution has been passed by the shareholders of the eligible business to liquidate the business,

(v) the eligible business has ceased operation, or

(vi) the eligible business is insolvent,

and it is unlikely that the assets available for distribution will be sufficient to redeem the securities of the bond corporation; or

(b) a prescribed circumstance arises.

Notice to bondholders

12(3)

Before the Government of Manitoba pays on its guarantee under subsection (2), the Minister of Finance shall give written notice to affected bondholders in such manner as he or she considers appropriate.

Purchase on death of bondholder

12(4)

If an eligible bondholder dies, the Government of Manitoba shall, upon application by the personal representative of the deceased, purchase a rural development bond that was held by that bondholder for an amount not exceeding the principal amount of the rural development bond.

No guarantee

12(5)

Despite anything in this section, the Government of Manitoba is not liable to purchase under subsection (4), or to pay on its guarantee of, a rural development bond referred to in subsection 20(6).

Rights on payment of guarantee

13

When the Government of Manitoba pays on its guarantee of a development bond or purchases a development bond under subsection 12(4),

(a) the Government thereupon becomes the owner of the rural development bond; and

(b) subject to any direction of the Lieutenant Governor in Council that may be given, the minister may, in such manner as the minister considers appropriate,

(i) exercise any right attached to the bond, or

(ii) hold, dispose of, mortgage, charge or otherwise deal with the bond.

PART 4

ADMINISTRATION

REVIEW COMMITTEE

Review committee established

14(1)

There is hereby established a Rural Development Bonds Review Committee consisting of such members as are appointed by the Lieutenant Governor in Council, a majority of whom shall be persons who are not employees of the Government of Manitoba.

Term, officers and expenses

14(2)

The Lieutenant Governor in Council may

(a) fix the term of office of a member;

(b)designate or provide for the designation of a chairperson, a vice-chairperson and a secretary; and

(c) authorize, fix and provide for the remuneration and expenses of a member who is not an employee of the Government of Manitoba.

Functions of committee

14(3)

The functions of the review committee are, in accordance with the directions of the minister,

(a) to review applications submitted to it under this Part for conformity with sound business practice; and

(b) to give such approvals and to such impose conditions as are provided for in this Part.

APPROVAL OF DISTRIBUTION OF DEVELOPMENT BONDS

Application to distribute bonds

15(1)

A bond corporation that proposes to issue and distribute rural development bonds that are to be subject to a guarantee and a right of purchase by the Government of Manitoba under section 12 shall submit to the minister an application in prescribed form which shall

(a) state the amount of money to be raised by the sale of the bonds;

(b) set out the terms and conditions of the bonds;

(c) include a draft offering memorandum containing the prescribed information;

(d) include a plan to market and distribute the bonds;

(e) include a certified copy of the by-laws of the bond corporation;

(f) in the case of an application to issue and distribute a project development bond, include

(i) the following information with respect to the eligible business in which the proceeds of the bonds are to be invested:

(A) its corporate name and any business names,

(B) its directors and officers,

(C) its shareholders and the names of any persons holding beneficial interests in shares and the number and type of shares held by each of those persons,

(ii) a business plan respecting the eligible business setting out, among other things,

(A) the total contribution of capital proposed to be made to the eligible business,

(B) the proposed contribution of capital by the bond corporation, and

(C) the name of each person, other than the bond corporation, who proposes to contribute capital and the nature and amount of his or her contribution, and

(iii) a letter of understanding between the bond corporation and the eligible business that sets out the terms of the proposed investment, including

(A) the amount of the investment,

(B) a description of the securities the eligible business proposes to issue to the bond corporation, and

(C) any provisions respecting the redemption, conversion and exchange of those securities;

(g) in the case of an application to issue and distribute an investment pool development bond, include

(i) the criteria to be used by the bond corporation to determine which eligible businesses the bond corporation is to invest in,

(ii) the terms on which those investments are to be made, and

(iii) the name of any eligible business known to the bond corporation in which the proceeds of the bond are intended to be invested;

(h) include any other prescribed information or documentation; and

(i) include any other information that the minister or the review committee requires.

Screening by minister

15(2)

Where the minister is satisfied that an application under subsection (1) complies with this Act and the regulations, the minister shall submit the application to the review committee.

Review by committee

16(1)

The review committee, in accordance with the directions of the minister,

(a) shall review an application submitted to it under subsection 15(2) for conformity with sound business practice; and

(b) if it is satisfied that the application complies or will comply with subsection (4), may give its approval to the application, subject to such conditions as the review committee considers advisable.

Effect of conditions to be specified

16(2)

If the review committee imposes any conditions on an approval under clause (1)(b), it shall specify whether the conditions must be met before the approval is effective or may be met at a later time.

Effect of approval

16(3)

Where the review committee approves an application under clause (1)(b) and the bond corporation satisfies any conditions imposed by the committee that must be met before the approval is effective,

(a) rural development bonds containing the terms and conditions and in an amount not exceeding the amount approved by the review committee are guaranteed by the Government of Manitoba in accordance with this Act and the regulations; and

(b) the bond corporation is authorized to issue and distribute those bonds in accordance with this Act and the regulations.

Prerequisites to approval

16(4)

Approval under clause (1)(b) shall not be given, unless

(a) the bond corporation is in compliance with this Act and the regulations and The Corporations Act;

(b) the rural development bonds and offering memorandum are in compliance with this Act and the regulations and the proceeds of the sale of the bonds are for the purpose of making an investment in an eligible business;

(c) the contribution of capital by the bond corporation to the eligible business does not exceed 40% of the total capital of the eligible business;

(d) the amount of the rural development bonds for which approval is sought does not exceed $2,000,000. or such greater sum as may be approved by the Lieutenant Governor in Council in respect of a single application for approval;

(e) the principal amount of the rural development bonds to be approved by the review committee, together with the principal amount of all the rural development bonds previously approved by the review committee, does not exceed the maximum authorized in an Act of the Legislature for the purpose of providing guarantees by the Government of Manitoba under this Act; and

(f) such conditions as may be prescribed are met.

Variation of approval

17

Sections 15 and 16 apply, with such modifications as the circumstances require, to an application to vary or rescind an approval given under clause 16(1)(b).

DISTRIBUTION OF DEVELOPMENT BONDS

Distribution of bonds

18

No person shall distribute rural development bonds except in accordance with the regulations.

Full money consideration for bonds

19

A bond corporation shall not issue a rural development bond for less than its face value or for a consideration other than money.

Definition

20(1)

In this section, "associated" means associated in the prescribed manner.

Maximum purchase

20(2)

Subject to subsection (3), no person or member of a group of associated persons shall hold bonds of any bond corporation in an amount exceeding

(a) $50,000.; or

(b) 10% of the amount of the rural development bonds approved by the review committee for issue and distribution by the bond corporation;

whichever is the lesser.

Permission to exceed maximum

20(3)

If the bond corporation

(a) makes a written request that a person be permitted to hold rural development bonds in an amount exceeding that permitted under subsection (2); and

(b) the Lieutenant Governor in Council is of the opinion that, in order to ensure that sufficient of those rural development bonds are sold, it is necessary to permit that person to hold rural development bonds in the requested amount;

the Lieutenant Governor in Council may, subject to such conditions as he or she considers appropriate and sets out in its order, permit that person to hold rural development bonds of the bond corporation not exceeding a specified amount.

Joint purchases

20(4)

If two or more persons hold a rural development bond jointly, each is deemed to be the sole holder of the bond for the purposes of subsection (2).

Beneficial owners

20(5)

A holder of a rural development bond for the benefit of another is deemed to be the holder of the bond for the purposes of subsection (2) unless that person provides to the bond corporation a statutory declaration that

(a) the rural development bonds are or were held for the benefit of another whose name and address is set out; and

(b) that other person is not associated with the holder.

No guarantee on excess amount

20(6)

The Government of Manitoba is not liable to pay on its guarantee of a rural development bond held by a bondholder, or purchase a rural development bond under subsection 12(4) held by a bondholder at the time of his or her death,

(a) in an amount exceeding that permitted in subsection (2), or, if permission is given under subsection (3) for another amount, exceeding that other amount; or

(b) who contravenes or fails to comply with any conditions imposed under subsection (3) on holding that other amount.

Proceeds of development bonds

21

A bond corporation shall hold the proceeds of the sale of rural development bonds, and other money received by it, in the prescribed manner.

APPROVAL OF INVESTMENT

Application to invest

22

A bond corporation that has raised capital by the issue and distribution of rural development bonds shall, before it invests any of the proceeds of the sale of those bonds in an eligible business, submit to the review committee through the minister an application in prescribed form which shall

(a) in the case of an application to invest the proceeds of the sale of project development bonds, identify any material change in the information submitted with respect to the proposed investment in the eligible business made in an application under subsection 15(1);

(b) in the case of an application to invest the proceeds of the sale of an investment pool development bond, include

(i) the following information with respect to each of the the eligible businesses in which the proceeds of the rural development bonds are to be invested:

(A) its corporate name and any business names,

(B) its directors and officers,

(C) its shareholders and the names of any persons holding beneficial interests in shares and the number and type of shares held by each of those persons,

(ii) a business plan respecting each of the the eligible businesses setting out, among other things,

(A) the total contribution of capital proposed to be made to the eligible business,

(B) the proposed contribution of capital by the bond corporation, and

(C) the name of each person, other than the bond corporation, who proposes to contribute capital and the nature and amount of his or her contribution, and

(iii) a letter of understanding between the bond corporation and each of those eligible businesses setting out the amount and the terms of the proposed investment;

(c) include any other prescribed information or documentation; and

(d) include any other information that the minister or the review committee requires.

Review by committee

23(1)

The review committee, in accordance with the directions of the minister,

(a) shall review an application submitted to it under section 22 for conformity with sound business practice; and

(b) if it is satisfied that the application complies or will comply with subsection (4), may give its approval to the application, subject to such conditions, including conditions to be met by the eligible business, as the review committee considers advisable.

Effect of conditions to be specified

23(2)

If the review committee imposes any conditions on an approval under clause (1)(b), it shall specify whether the conditions must be met before the approval is effective or may be met at a later time.

Effect of approval

23(3)

Where the review committee approves an application under clause (1)(b) and the bond corporation and eligible business satisfy any conditions that must be met before the approval is effective, the bond corporation may, in accordance with that approval and this Act and the regulations, invest the proceeds of the sale of the rural development bonds.

Prerequisites to approval

23(4)

Approval under clause (1)(b) shall not be given, unless

(a) the conditions described in clauses 16(4)(a) to (f) are satisfied; and

(b) such conditions as may be prescribed are met.

Variation of approval

24

Sections 22 and 23 apply, with such modifications as the circumstances require, to an application to vary or rescind an approval given under clause 23(1)(b).

Disbursement of proceeds

25

A bond corporation shall not disburse the proceeds of the sale of rural development bonds except as provided by regulation.

Continuing financial disclosure

26

An eligible business shall make continuing financial disclosure to The Manitoba Securities Commission in accordance with those provisions of The Securities Act that by regulation apply to eligible businesses.

Insider trading

27

A person who is an insider of a bond corporation or an eligible business is subject to those provisions of The Securities Act that by regulation apply to insiders.

APPROVAL OF CONVERSION OR EXCHANGE OF SECURITIES

Application to convert or exchange

28(1)

A bond corporation that has invested the proceeds of the sale of project development bonds in an eligible business shall make an application in prescribed form to the minister for approval of the conversion or exchange of the bonds of those bondholders who propose to convert or exchange their bonds for securities of the eligible business, if

(a) two years have elapsed since the closing date of the initial distribution of the bonds by the bond corporation; and

(b) the bondholders have passed a resolution requesting that the bond corporation make application for the approval of the review committee to the conversion or exchange of the the bonds of those bondholders who wish to convert or exchange their bonds for securities of the eligible business.

Contents of application

28(2)

An application under subsection (1) shall include

(a) a certified copy of the resolution referred to in clause (1)(b) with a statement of the results of the vote on it and the names of those bondholders who voted in favour of and against the resolution;

(b) the prescribed financial information respecting the eligible business;

(c) a disclosure document proposed to be given to the bondholders;

(d) a communications plan respecting disclosure to bondholders; and

(e) any other information that the minister or the review committee requires.

Screening by minister

28(3)

Where the minister is satisfied that an application under subsection (1) complies with this Act and the regulations, the minister shall submit the application to the review committee.

Review by committee

29(1)

The review committee, in accordance with the directions of the minister,

(a) shall review an application submitted to it under subsection 28(1) for conformity with sound business practice; and

(b) if it is satisfied that it is appropriate to do so, may give its approval to the application, subject to such conditions, including conditions to be met by the eligible business, as the review committee considers advisable.

Effect of conditions to be specified

29(2)

If the review committee imposes any conditions on an approval under clause (1)(b), it shall specify whether the conditions must be met before the approval is effective or may be met at a later time.

Where conversion or exchange allowed

29(3)

The bond corporation may convert or exchange the rural development bonds for securities of the eligible business, if

(a) the review committee approves an application under clause (1)(b) and the bond corporation and the eligible business satisfy any conditions that must be met before the approval is effective; and

(b) after being given the disclosure document referred to in clause 28(2)(c) as approved by the review committee, the bondholders pass a resolution directing that the rural development bonds of those bondholders who wish to convert or exchange their bonds for securities of the eligible business be converted or exchanged.

PART 5

ENFORCEMENT

DUTIES RESPECTING DOCUMENTS

Documents of bond corporation

30(1)

A bond corporation shall keep at its head office in Manitoba, or at another place of business in Manitoba authorized by the minister, its documents, records and books of account that relate to the raising of money by the sale of rural development bonds and shall retain them at that location until six years after the date of the redemption, conversion or exchange of the last rural development bond to which the documents, records or books of account relate.

Documents of eligible business

30(2)

An eligible business in which the proceeds of the sale of rural development bonds is invested shall keep at its head office in Manitoba, or at another place of business in Manitoba authorized by the minister, the documents, records and books of account that relate to that investment and shall retain them at that location until six years after the date on which the bond corporation ceases to be an investor in the eligible business.

INSPECTION

Inspectors

31(1)

The minister may appoint any person as an inspector for the purposes of this Act.

Certificate to be furnished

31(2)

The minister shall furnish an inspector with a certificate of appointment.

Certificate to be produced

31(3)

An inspector exercising a power under this Act shall, on request, produce his or her certificate of appointment.

Powers of inspectors

32(1)

An inspector may

(a) at any reasonable time enter any place where the inspector believes on reasonable grounds that any documents, records, books of account or things relevant to the enforcement of this Act or the regulations are located;

(b) examine or audit any documents, records or books of account or examine any things found in the place;

(c) after giving a receipt for them, remove from the place any documents, records or books of account for the purpose of making copies or extracts.

Warrant to enter

32(2)

Where a justice is satisfied by information on oath that there are reasonable grounds to believe that it is necessary to enter a place for the enforcement of this Act or the regulations, and that

(a) a reasonable, unsuccessful effort to enter the place has been made; or

(b) there are reasonable grounds to believe that entry would be denied without a warrant;

the justice may, on application without notice, issue a warrant authorizing an inspector, with such peace officers as are required to assist, to enter the place, to take any action that an inspector may take under this Act and to use such force as may be necessary.

Assistance to inspectors

32(3)

The person in charge of a place referred to in clause (1)(a) and any person found in that place shall

(a) give the inspector all reasonable assistance to enable the inspector to carry out his or her functions under this Act; and

(b) furnish the inspector with any information he or she may reasonably require for the enforcement of the Act or the regulations.

Obstruction of inspectors

32(4)

No person shall obstruct an inspector in the carrying out of his or her functions under this Act.

POWERS OF MINISTER

Order of compliance

33

Where, on application by the minister, the court is satisfied that a bond corporation has failed to comply with this Act, the regulations or a condition to which an approval under Part 4 is subject, the court may make an order that the bond corporation comply.

Order to liquidate or dissolve corporation

34

Where, on application of the minister and notice to the bondholders and directors of the corporation, the court is satisfied that a bond corporation

(a) has failed to comply with this Act, the regulations or a condition to which an approval under Part 4 is subject; or

(b) whether in connection with an application or otherwise, has submitted any information or documentation to, or has made any statement to, or has answered any question asked by, the minister or the review committee under this Act, that is false or misleading or misrepresents or fails to disclose a material fact;

the court may make

(c) an order under section 210 of The Corporations Act; or

(d) any other order it considers appropriate.

Appointment of receiver-manager

35(1)

Subject to subsection (3), where the minister is satisfied that a circumstance described in clause 34(a) or (b) has arisen with respect to a bond corporation, the minister may appoint a receiver or receiver-manager of that bond corporation.

Application of Corporations Act

35(2)

For the purposes of The Corporations Act, a receiver or receiver-manager appointed under subsection (1) is deemed to be appointed under an instrument.

Notice of appointment

35(3)

The minister shall

(a) in such manner as he or she considers appropriate, give notice to the bondholders and to the directors of the bond corporation of his or her intention to appoint a receiver or a receiver-manager; and

(b) give the directors of the bond corporation an opportunity to be heard with respect to the appointment;

unless the minister considers it to be in the public interest that no notice or opportunity to be heard be given.

Notice and hearing after appointment

35(4)

If no notice or opportunity to be heard is given under subsection (3), the minister shall, without delay after the appointment of a receiver or receiver-manager under subsection (1), on such notice as he or she considers appropriate, give the directors of the bond corporation an opportunity to be heard with respect to the appointment of the receiver or receiver-manager.

PART 6

GENERAL

EVIDENCE

Certificate of minister

36

In a prosecution or proceeding under this Act in which proof is required respecting an approval of the minister under subsection 4(1), an approval of the review committee under Part 4 or a condition to which an approval under Part 4 is subject, a certificate signed by the minister is admissible in evidence of the facts stated in the certificate without proof of the minister's signature.

IMMUNITY FROM ACTION

Immunity

37(1)

No action or proceeding may be brought against the minister, a member of the review committee or an employee or agent of the Government of Manitoba for any act done in good faith in the performance or intended performance of a duty or in the exercise of a power under this Act, or for any neglect or default in the performance or exercise in good faith of such duty or power.

Compellability of witness

37(2)

The minister, a member of the review committee or an employee or agent of the Government of Manitoba shall not, in a civil action or proceeding, be required to testify about information or to produce documents or things obtained under this Act, except for the purposes of carrying out the person's duties under this Act.

REGULATIONS

Regulations

38

The Lieutenant Governor in Council may make regulations

(a) designating classes of corporations for the purposes of the definition of "sponsoring corporations";

(b) providing that the provisions of The Corporations Act respecting corporations with share capital do not apply in respect of bond corporations or apply in the manner and to the extent specified;

(c) providing that the provisions of The Securities Act do not apply to rural development bonds or transactions under this Act or apply in the manner and to the extent specified;

(d) respecting the form and the terms and conditions of rural development bonds;

(e) respecting the distribution of rural development bonds;

(f) requiring a person to provide specified information to another person in the form and at the times specified;

(g) respecting the procedure to be followed by an eligible bondholder in making a claim for payment under a guarantee, or purchase under subsection 12(4), by the Government of Manitoba of a rural development bond;

(h) prescribing anything that by this Act may be prescribed;

(i) defining any word or expression used but not defined in this Act; and

(j) respecting any matter the Lieutenant Governor considers necessary or advisable to carry out the intent and purpose of this Act.

OFFENCES AND PENALTIES

Offences

39(1)

Every person is guilty of an offence who

(a) issues or distributes a rural development bond or anything purporting to be a rural development bond other than in accordance with this Act and the regulations;

(b) whether in connection with an application or otherwise, has submitted any information or documentation to, or has made any statement to, or has answered any question asked by, the minister or the review committee under this Act, knowing that the information, documentation, statement or anwer is false or misleading or misrepresents or fails to disclose a material fact; or

(c) contravenes this Act or the regulations.

Director or officer of corporation

39(2)

If a corporation commits an offence under this Act, a director or officer of the corporation who authorized, permitted or acquiesced in the commission of the offence is a party to and is guilty of an offence and is liable on summary conviction to the penalty provided in subsection (3) whether or not the corporation has been prosecuted or convicted.

Penalty for individuals

39(3)

An individual who is convicted of an offence under this Act is liable to a fine of not more than $50,000. or to imprisonment for a term not exceeding one year, or to both.

Penalty for corporations

39(4)

A corporation that is convicted of an offence under this Act is liable to a fine of not more than $100,000.

Limitation

39(5)

Proceedings in respect of an offence under this Act may not be instituted more than three years after the commission of the offence.

COMING INTO FORCE

C.C.S.M. reference

40

This Act may be cited as The Rural Development Bonds Act and referred to as chapter R175 of the Continuing Consolidation of the Statutes of Manitoba.

Coming into force

41

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