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Incentive Investment Capital Programs in British Columbia

Incentive Investment Capital programs in British Columbia

PART IV (see part I, PART II and Part III for applicable definitions)

 

by Alina V. Nikolaeva

Labor Sponsored Investment Fund

Another way to participate in portfolio investment besides VCC is to invest into a labor sponsored investment fund.  In BC there is currently one labor-sponsored investment fund registered as employee venture capital corporations under the Employee Investment Act.  The goal of this fund is to earn a competitive return for shareholders, through long-term equity investments in small to medium-sized businesses in BC’s emerging markets.  BC investors receive a combined federal (15%) and provincial (15%) tax credit of up to 30% on their investment in a labor-sponsored investment fund.  This can be used to reduce their income taxes.

 

Eligibility – Investors

BC residents invest in Employee Venture Capital Corporation (EVCC) in return for common shares of the EVCC, which they should keep for at least 5 years.

 

Eligibility – Business

The EVCC then invests in eligible businesses.  Eligible business must:

  • Pay at least 50% of its wages to BC residents;
  • Have, together with its affiliates, less than $50 million in total assets;
  • Not engage substantially in an ineligible activity (must be EBC engaged in 5 qualifying activities).

 

Eligibility – Shares

The shares of the eligible businesses that EVCC purchases must be:

  • Common or preferred shares;
  • EVCC must be at arm’s length and own less than 50% control;
  • Eligible businesses can receive a maximum of $10 million from EVCC every 2 years.