1992 Legislative Session: 1st Session, 35th Parliament
THIRD READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


Certified correct as passed Third Reading on the 11th day of June, 1992
Ian D. Izard, Law Clerk.


MINISTER OF ECONOMIC DEVELOPMENT,
SMALL BUSINESS AND TRADE

BILL 36 -- 1992
EMPLOYEE INVESTMENT AMENDMENT ACT, 1992

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

1 Section 1 of the Employee Investment Act, S.B.C. 1989, c. 24, is amended

(a) in subsection (1) by adding the following definitions:

"annuitant" has the same meaning as "annuitant" in the Income Tax Act (Canada);

"authorized depository" means a person authorized by the administrator to act as an authorized depository under this Act; ,

(b) in subsection (1) by repealing the definition of "disposition",

(c) in subsection (1) by repealing the definition of "eligible investor" and substituting the following:

"eligible investor" means an individual who, at the time of subscribing for a share of an employee venture capital corporation,

(a) is resident in British Columbia,

(b) is employed in British Columbia on a continuing basis for at least 20 hours each week,

(c) is not a major shareholder of the employee venture capital corporation and, in the case of an employee venture capital corporation that has a restricted constitution, is not a major shareholder of any of the corporations that the employee venture capital corporation is restricted to investing in by its constitution, and

(d) meets other prescribed conditions; ,

(d) in subsection (1) by repealing the definition of "employee organization" and substituting the following:

"employee organization" means

(a) a trade union,

(b) an association or federation of trade unions,

(c) a corporation owned and controlled by one or more trade unions or associations or federations of trade unions, or

(d) a prescribed association of employees; ,

(e) in subsection (1) by repealing the definition of "employee shareholder" and substituting the following:

"employee shareholder" means an eligible employee who owns shares purchased under an employee share ownership plan; ,

(f) in subsection (1) by adding the following definitions:

"hardship disposition" means a disposition of a share occasioned by one of the following circumstances occurring after the initial subscription for the share:

(a) the death, permanent disability, bankruptcy or bona fide involuntary loss of employment of the shareholder or, if the shareholder is a trust, of the annuitant or beneficiary of the trust;

(b) other prescribed circumstances;

"redeem" includes to purchase or otherwise acquire;

"restricted constitution" means a constitution of a corporation that restricts the corporation to investing only in equity shares of a particular eligible business and affiliates of that eligible business;

"trust" means

(a) a trust governed by a registered retirement savings plan as defined in the Income Tax Act (Canada),

(b) a trust governed by a registered retirement income fund as defined in the Income Tax Act (Canada),

(c) a trust, in a form and on terms approved by the administrator, established for the purpose of acquiring or holding shares issued under a plan, or

(d) other prescribed trusts;

"trust disposition" means a disposition of a share

(a) to a trust for which the transferor or the transferor's spouse is the annuitant or beneficiary,

(b) from a trust to the annuitant or beneficiary of the trust,

(c) from one trust to another trust if both trusts have the same annuitant or beneficiary, or

(d) in other prescribed circumstances. , and

(g) by repealing subsection (2) (c) and substituting the following:

(c) the annuitant or beneficiary of a trust shall be deemed to have purchased, held or disposed of shares that are purchased, held or disposed of by the trust.

2 Section 4 (1) is amended

(a) in paragraph (d) (ii) by striking out "without series",

(b) in paragraph (i) by striking out "or transferred", and

(c) by repealing paragraph (j) (ii) and substituting the following:

(ii) give priority to hardship dispositions; .

3 Section 9 is amended by adding the following paragraph:

(a.1) is sponsored by an employee organization or an employee group, .

4 Section 10 (1) is amended

(a) by repealing paragraph (c) and substituting the following:

(c) if the employee venture capital plan is for a corporation that does not have a restricted constitution, that every eligible investor has an equal right to purchase shares under the plan;

(c.1) if the employee venture capital plan is for a corporation that has a restricted constitution, that every eligible investor who has, for a period set out in the plan of not more than 2 years, been employed by the eligible business referred to in the corporation's constitution or an affiliate of that eligible business, has an equal right, or a pro rata right based on length of service, to purchase shares under the plan; ,

(b) in paragraph (d) (ii) by striking out "without series",

(c) in paragraph (f) by striking out ", does not provide for a premium for control or discount of minority interests and is computed" and substituting "and is computed on the basis of fair market value",

(d) in paragraph (i) by striking out "or transferred", and

(e) by repealing paragraph (j) (ii) and substituting the following:

(ii) give priority to hardship dispositions; .

5 Section 15 (1) (f) is repealed and the following substituted:

(f) in the case of an employee venture capital corporation that has a restricted constitution, the investment is in the eligible business or affiliated businesses referred to in the employee venture capital corporation's constitution;

(g) such other requirements as may be prescribed.

6 Section 17 (1) is amended by striking out "is not restricted by its constitution to acquiring shares in a particular eligible business" and substituting "does not have a restricted constitution".

7 Section 18 (1) is amended by striking out "any of the shares of the employee venture capital corporation are owned by a person who" and substituting "a major shareholder of the employee venture capital corporation".

8 Section 19 is repealed and the following substituted:

Aggregate investment

19 An employee venture capital corporation shall not make or hold an investment in an eligible business where, as a result of that investment, the aggregate of all amounts received directly or indirectly by that eligible business from the employee venture capital corporation, any other employee venture capital corporations and any venture capital corporations registered under the Small Business Venture Capital Act, would exceed $5 million within a 2 year period.

9 Section 29 (2) is repealed and the following substituted:

(2) Subject to subsection (2.1), a shareholder who disposes of shares in respect of which a tax credit was allowed under section 8.8 of the Income Tax Act, shall repay or cause to be repaid to the Minister of Finance and Corporate Relations an amount equal to the tax credits allowed in respect of those shares under section 8.8 of the Income Tax Act and section 127.4 of the Income Tax Act (Canada) or a lesser amount determined under the regulations in prescribed circumstances

(a) if the shares were issued under an employee share ownership plan and the disposition is made within 3 years after the date of the issue of the shares, or

(b) if the shares were issued under an employee venture capital plan and the disposition is made within 5 years after the date of the issue of the shares.

(2.1) Subsection (2) does not apply where

(a) the disposition is a trust disposition,

(b) the disposition is a hardship disposition,

(c) the shares disposed of were acquired by the shareholder under a hardship disposition, or

(d) a tax credit repayment under subsection (2) had previously been made in respect of the shares disposed of.

10 Section 35 (6) is repealed.

11 Section 36 (1) (a) is amended by striking out "requiring to be".

 
Consequential Amendment

 
Company Act

12 Section 41 (2) of the Company Act, R.S.B.C. 1979, c. 59, is amended by striking out "or" at the end of paragraph (d), by adding "; or" at the end of paragraph (e) and by adding the following:

(f) an employee venture capital plan registered under Part 2 of the Employee Investment Act.

Commencement

13 (1) This Act, except section 1 (c), comes into force by regulation of the Lieutenant Governor in Council.

(2) Section 1 (c) is deemed to have come into force on January 8, 1992 and is retroactive to the extent necessary to give it effect on and after that date.


[ Return to: Legislative Assembly Home Page ]

Copyright © 1992: Queen's Printer, Victoria, British Columbia, Canada