Community Development Bonds Regulation

Community Development Bonds Regulation, M.R. 224/91 The Community Development Bonds Act , C.C.S.M. c. C160 Regulation 224/91 Registered October 15, 1991 bilingual version (HTML) Table of Contents Section INTERPRETATION 1 Definition 2 Criteria for "eligible business" 3 Development corporations designated as "sponsoring corporations" APPLICATION OF CORPORATIONS ACT AND SECURITIES ACT 4 Application of The Corporations Act 5 Application of The Securities Act LIMITATIONS 6 Additional limitations on bond corporations FILING OBLIGATIONS OF BOND CORPORATION 7 Documents required to be filed 8 Repealed ISSUE AND DISTRIBUTION OF DEVELOPMENT BONDS 9-10 Repealed 11 Prerequisites to approval 12 Persons entitled to distribute bonds 13 Prohibitions and respecting advertising and promotion 14 Definition of "associated" HOLDING AND DISBURSEMENT OF MONEY 15 Manner of holding money 16 Disbursement of proceeds of bonds and interest 17 Short-term investments 18-19 Repealed DISCLOSURE OF INFORMATION 20 Continuing disclosure by eligible business 21 Continuting disclosure by bond corporation 22 Disclosure on exchange or conversion 23 Disclosure by eligible business on exchange PROCEDURE FOR PAYMENT OF GUARANTEES AND PURCHASE ON DEATH OF ELIGIBLE HOLDER 24 Procedure for payment of guarantee 25 Procedure for payment of death of bondholder 26 Repealed Schedule Repealed INTERPRETATIONS Definitions 1(1) In this regulation, " Act " means The Community Development Bonds Act . M.R. 33/2003 1(2) For the purposes of clause 1(2)⁠(a) of the Act, an individual is resident in Manitoba if he or she (a) has a home for his or her own use in Manitoba; or (b) after having made his or her home in Manitoba, is temporarily absent from, and intends thereafter to return to, Manitoba. Criteria for "eligible business" 2(1) A business is an eligible business if (a) it is a corporation incorporated under The Corporations Act or the Canada Business Corporations Act or a co-operative under The Cooperatives Act ; (b) it carries on, or is about to carry on, business for gain or profit in Manitoba; (c) the assets of the business located in Manitoba are, or on the commencement of business in Manitoba will be, controlled by persons resident in Manitoba; (d) the principal business carried on, or about to be carried on, is (i) the business of (A) manufacturing, (B) processing, (C) operating a tourist attraction, (D) exporting goods manufactured or processed in Manitoba to a place outside Manitoba for the purpose of resale, or (E) providing goods or services for the purpose of protecting the environment, and the proposed investment by the business of the proceeds of the sale of community development bonds is for the purpose of establishing or enhancing the business, (ii) the operation of facilities in Manitoba for the distribution of water or natural gas and the proposed investment by the business of the proceeds of the sale of community development bonds is for the purpose of establishing, acquiring or enhancing the business; and (e) it is not (i) a business having as its object the furtherance of a charitable or religious purpose, (ii) a business that earns or is anticipated to earn a substantial part of its revenue from the provision of services to members of the public paid for by the Government of Canada, the Government of Manitoba, an agency of the Government of Canada or Manitoba, a municipality or a school board, or (iii) a business in which the Government of Canada, the Government of Manitoba, an agency of the Government of Canada or Manitoba or a municipality holds or is proposed to hold shares. M.R. 33/2003 2(2) In this section, "agency of the Government of Canada or Manitoba" means a board, commission or other body that is incorporated, any of the members of which, or of the board of management of which, are appointed by an Act of the Parliament of Canada or the Legislature of Manitoba or by order of the Governor in Council of Canada or the Lieutenant Governor in Council of Manitoba; (« organisme du gouvernement du Canada ou du Manitoba ») "processing" does not include the processing of petroleum, natural gas or related hydrocarbons; (« traitement ») "tourist" means a person who travels to a place in Manitoba away from his or her home (a) for the purpose of attending an event or attraction or engaging in a leisure activity, or (b) with the intention of staying overnight; (« touriste ») "tourist attraction" means a facility or development that is designed to attract tourists, but does not include a restaurant or other facility for the sale of food to the public or a hotel, motel, campground or other transient accommodation unless it is ancilliary to that facility or development. (« attraction touristique ») Development corporations designated as "sponsoring corporations" 3 Corporations incorporated under The Corporations Act for the purpose of encouraging community and economic development are designated as a class of corporations for the purpose of clause (b) of the definition of "sponsoring corporation" in subsection 1(1) of the Act. M.R. 33/2003 APPLICATION OF CORPORATIONS ACT AND SECURITIES ACT Application of The Corporations Act 4(1) Subsections 1(6), 1(7), 24(3), 24(4), section 27, subsections 41(1), 42(2), 100(3), section 120 and subsection 167(2) and section 184 of The Corporations Act do not apply to bond corporations. 4(2) The Corporations Act applies to bond corporations in the manner and to the extent indicated: (a) subsection 25(3) does not apply to the extent that it conflicts with section 19 of the Act; (b) subsection 106(1) does not apply in respect of a director of a bond corporation who is appointed by a municipality or a sponsoring corporation; (c) section 107 applies only to the extent that the minimum number of directors shall not be less than six and the maximum number shall not be more than 12; (d) section 126 does not apply so as to permit meetings of a bond corporation to occur outside Manitoba; (e) the provisions of The Corporations Act apply only to such an extent as to permit those actions by the corporation, its directors or officers, its shareholders or the court that do not result in the bond corporation contravening the Act or this regulation; (f) The Corporations Act applies only to the extent that it does not conflict with the Act. Application of The Securities Act 5(1) Clauses 19(1)⁠(c), (e), (f), and (h) to (m), sections 58, 67 and 68, Part X (Proxies and Proxy Solicitation), section 109 and Parts XIII (Offences and Penalties), XIV (General Provisions), XV (Mineral Interest Brokers) and XVI (Investment Contracts) of The Securities Act do not apply in respect of community development bonds or to transactions under the Act. M.R. 33/2003 5(2) The following provisions of The Securities Act apply to bond corporations and transactions under the Act in the manner and to the extent indicated: (a) section 6 does not apply to trades of community development bonds in the course of a primary distribution to the public by (i) the bond corporation that issues the community development bonds or any director or officer of that corporation, if no commission is payable in connection with the trade, or (ii) any agent of the bond corporation if that agent complies with section 12 of this regulation; (b) section 37 does not apply to the primary distribution to the public of community development bonds if the community development bonds are issued in compliance with Part 4 of the Act pursuant to an offering memorandum that complies with Form 5 of the Schedule; (c) sections 6 and 37 and Part IX (Take-Over Bids) do not apply to the conversion or exchange of project development bonds into securities of an eligible business under the Act; (d) Part XI (Insider Trading), except section 109, applies in respect of bond corporations and transactions under the Act. M.R. 138/97; 33/2003 LIMITATIONS Additional limitations on bond corporations 6 For the purposes of clause 6(c) of the Act, the following are prescribed as things that no bond corporation shall do, without the consent of the minister: (a) loan money to any person; (b) give a guarantee on behalf of the corporation to secure the performance of an obligation by another person; (c) continue under the laws of any other jurisdiction. FILING OBLIGATIONS OF BOND CORPORATION Documents required to be filed 7 For the purposes of subsection 9(2) of the Act, a bond corporation shall file with the minister (a) a copy of every document filed by the bond corporation with the Corporations Branch without delay after the document has been filed with that Branch; (b) a copy of every application form under Part 4 of the Act and all documents enclosed with it at the same time as they are submitted under Part 4; (c) a copy of every approval of an application under Part 4 of the Act without delay after the approval is given by the review committee; and (d) where the review committee imposes a condition that requires that the application or a document enclosed with it be amended before the approval is effective, a copy of every amendment without delay after the amendment is made. 8 [Repealed] M.R. 138/97 ISSUE AND DISTRIBUTION OF BONDS 9 and 10 [Repealed] M.R. 138/97 Prerequisites to approval 11 For the purposes of clause 16(4)⁠(f) of the Act, the following conditions are prescribed as conditions that are to be met before the review committee approves an application made under subsection 15(1) of the Act: (a) the eligible business is, or upon the making the investment will be, commercially viable; (b) the eligible business will likely be able to repay the investment of the bond corporation as it becomes due; (c) the investment by the bond corporation in the eligible business, when made, entails no more than a reasonable risk to the bond corporation having regard to established business practice; (d) in the case of investment pool development bonds, the proceeds of the sale of the bonds will likely be committed to one or more eligible businesses within two years after the date of their initial distribution. M.R. 138/97 Persons entitled to distribute bonds 12(1) No person, other than a person described in subsection (2) or (3), shall distribute community development bonds. M.R. 33/2003 12(2) A person registered to trade in securities under The Securities Act in a category that permits trading in community development bonds may for a fee or commission distribute the community development bonds of a bond corporation if that person has entered into an agency agreement with that corporation in respect of the distribution of its community development bonds in the form and containing the provisions approved by the review committee. M.R. 33/2003 12(3) An individual who is resident in the municipality in which a bond corporation has its head office or in a nearby municipality may distribute the community development bonds of that bond corporation if he or she (a) has successfully completed a course approved by the minister in the distribution of community development bonds; (b) has entered into an agency agreement with that corporation in respect of the distribution of its community development bonds in the form and containing the provisions approved by the review committee; and (c) distributes the community development bonds without a fee or commission. M.R. 33/2003 Prohibitions respecting advertising and promotion 13(1) No person shall promote the sale of community development bonds unless their issue and distribution have been approved by the review committee. M.R. 33/2003 13(2) No person shall publish, broadcast or otherwise disseminate an advertisement for the sale of community development bonds unless the advertisement has been approved by the minister. M.R. 33/2003 13(3) No bond corporation and no person acting on behalf of a bond corporation shall (a) in promoting the sale of community development bonds to any person make a statement or provide information or documentation; or (b) publish, broadcast or otherwise disseminate an advertisement; that is false or misleading or misrepresents or fails to disclose a material fact respecting the community development bonds. M.R. 33/2003 Definition of "associated" 14(1) For the purposes of subsection 20(1) of the Act, a group of persons constitutes a group of associated persons if the group consists of (a) individuals who (i) are related by blood or adoption, (ii) are married to or cohabit with each other, or (iii) are related by blood or adoption to persons who are married to or cohabit with each other, and who reside in the same household; or (b) any individual or group of individuals referred to in clause (a) and any corporation (i) in which an individual or any group of individuals referred to in clause (a) holds, or has a beneficial interest in or share warrant or purchase option with respect to, more than 10% of the issued capital stock of the corporation, (ii) of which an individual referred to in clause (a) is a director or officer, (iii) that is controlled by another corporation in which an individual or group of individuals referred to in clause (a) holds or has a beneficial interest in or share warrant or purchase option with respect to, more than 10% of the issued capital, or (iv) that is controlled by another corporation of which an individual referred to in clause (a) is a director or officer. 14(2) In this section, a corporation is controlled by an individual if (a) securities of the corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation are held, other than by way of security only, by or for the benefit of that individual; and (b) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the corporation. HOLDING AND DISBURSEMENT OF MONEY Manner of holding money 15 For the purposes of section 21 of the Act, a bond corporation shall, subject to section 17, hold the proceeds of the sale of community development bonds and other money received by it in an account in a branch in Manitoba of (a) a bank set out in Schedule I to the Bank Act (Canada) or a trust company entitled to carry on business in Manitoba, if the bank or trust company has a long term credit rating of "A" or better from Standard and Poors, the Dominion Bond Rating Service or the Canadian Bond Rating Service; or (b) a credit union or caisse populaire to which The Credit Unions and Caisse Populaires Act applies. M.R. 33/2003 Disbursement of proceeds of bonds and interest 16(1) Subject to section 17, a bond corporation shall not disburse the proceeds of the sale of project development bonds except for one of the following purposes: (a) investing in an eligible business in accordance with the approval of the review committee; (b) repaying pro rata the uninvested proceeds to the bondholders in accordance with its obligations under the project development bond, if the bond corporation fails to invest the proceeds within the time required in the project development bond. M.R. 138/97 16(2) Subject to section 17, a bond corporation shall not disburse any of the proceeds of the sale of investment pool development bonds except for one of the following purposes: (a) defraying administrative, promotional or advertising costs respecting the distribution and investment of the proceeds of the sale in an amount approved by the review committee and set out in the offering memorandum with respect to the issue and distribution of those investment pool development bonds; (b) investing in eligible businesses in accordance with the approval of the review committee; (c) repaying the proceeds to the bondholders in accordance with its obligations under the investment pool development bond if the bond corporation fails to invest the proceeds within the time required in the investment pool development bond. M.R. 138/97 16(3) Subject to section 17, a bond corporation shall not disburse the interest on the proceeds of the sale of community development bonds except as approved by the review committee and set out in the offering memorandum with respect to the issue and distribution of those community development bonds. M.R. 33/2003 Short-term investments 17 A bond corporation may, pending the investment of the proceeds of the sale of community development bonds in an eligible business, invest those proceeds in any investment that matures in 91 days or less issued by (a) an institution referred to in clause 15(a) or (b); (b) the Government of Canada or a province; or (c) an insurance company entitled to carry on business in Manitoba, if the insurance company has a long term credit rating of AAA or better by Standard and Poors. M.R. 138/97; 33/2003 18 and 19 [Repealed] M.R. 138/97 DISCLOSURE OF INFORMATION Continuing disclosure by eligible business 20 An eligible business in which a bond corporation invests the proceeds of the sale of project development bonds shall in accordance with section 23, not later than 170 days after the end of each fiscal year of the eligible business, give a written statement of financial information in the form and containing the information required by the minister to (a) the bond corporation; (b) each bondholder of the bond corporation; and (c) the Manager of the Community Development Bond Office. M.R. 138/97; 33/2003 Continuing disclosure by bond corporation 21 A bond corporation that invests the proceeds of the sale of project development bonds in an eligible business shall, in accordance with section 23, give a copy of the statement of financial information described in section 20 to each bondholder and to the Manager of the Community Development Bond Office within 60 days after the later of (a) the end of each fiscal year of the bond corporation; and (b) the date by which the eligible business is required to give the financial information referred to in section 20 to the bond corporation. M.R. 138/97; 33/2003 Disclosure by bond corporation on exchange 22(1) A bond corporation that proposes to apply to the review committee for approval of the conversion or exchange of the project development bonds of bondholders for securities of an eligible business may in accordance with section 23 give notice to the eligible business to provide a statement of disclosure in the form and containing the information required by the minister. M.R. 138/97 22(2) An eligible business shall in accordance with section 23, within 30 days of receipt of the notice in writing from a bond corporation referred to in subsection (1), give to the bond corporation a copy of a statement of disclosure described in subsection (1). M.R. 138/97 Disclosure by eligible business on exchange 23(1) A copy of a document referred to in section 20 or 22 must be given to a bond corporation or to an eligible business (a) by sending a copy by mail addressed to the bond corporation or eligible business at its registered office; or (b) personally by handing a copy to a director or officer of the bond corporation or eligible business. M.R. 33/2003 23(2) A copy of a document referred to in section 20 or 21 must be given to a bondholder (a) by sending a copy by mail to the bondholder's address as shown on the register of bondholders maintained by the bond corporation; or (b) personally by handing a copy to (i) the bondholder if he or she is an individual, (ii) a director or officer of a corporation if the bondholder is a corporation, other than a municipality, (iii) the chief administrative officer, if the bondholder is a municipality, (iv) the resident administrator if the bondholder is a local government district, (v) the clerk or treasurer if the bondholder is an incorporated community council under The Northern Affairs Act , or (vi) the Minister of Aboriginal and Northern Affairs, if he or she has become a bondholder by exercising powers, rights, privileges or responsibilities under subsection 5(1) of The Northern Affairs Act . M.R. 33/2003 23(3) A copy of a document referred to in section 20 or 21 must be given to the Manager of the Community Development Bond Office (a) by sending a copy by mail addressed to him or her at the Bond Office; or (b) by personally handing him or her a copy. M.R. 33/2003 23(4) A copy of a document sent by mail to a person in accordance with this section is deemed to have been received by that person five days after it is sent. M.R. 33/2003 PROCEDURE FOR PAYMENT OF GUARANTEES AND PURCHASE ON DEATH OF ELIGIBLE HOLDER Procedure for payment of guarantee 24 A bondholder who desires payment by the Government of Manitoba of the guarantee of the principal amount of a community development bond must provide the following to the Minister of Finance: (a) the community development bond with the transfer form thereon duly completed; (b) a demand for payment that sets out (i) the name, address and telephone number of the bondholder and of the authorized agent of the bondholder, if the demand is made by an authorized agent, and (ii) the name of the bond corporation that issued the community development bond, the number and principal amount of the community development bond and the amount of principal demanded by the bondholder; (c) proof on affidavit of the bondholder or the authorized agent of the bondholder of the following in the form required by the Minister of Finance: (i) the eligibility of the bondholder, (ii) the authority of any agent, (iii) the information referred to in subclause (b)⁠(ii), (iv) where the demand is made in circumstances other than those described in subsection 12(2) of the Act, the fact that (A) a demand for redemption was made on the bond corporation on a specified date, (B) the bond corporation failed to redeem the community development bond in accordance with the demand, and (C) the bondholder has suffered a loss of principal in the amount specified as a result of the failure of the bond corporation to redeem the community development bond as required, (v) where the demand is made in the circumstances described in subsection 12(2) of the Act, the circumstances that have arisen and the fact that the bondholder will likely suffer a loss of principal in the amount specified. M.R. 138/97; 33/2003 Procedure for payment on death of bondholder 25 The personal representative of an eligible bondholder who desires to have the Government of Manitoba purchase a community development bond under subsection 12(4) of the Act must provide the following to the Minister of Finance: (a) the community development bond with the transfer form thereon duly completed; (b) an application that sets out (i) the name, address and telephone number of the personal representative, and (ii) the name of the bond corporation that issued the community development bond, the number and principal amount of the community development bond and the amount of principal demanded by the personal representative; (c) proof on affidavit of the personal representative of the following in the form required by the Minister of Finance: (i) the eligibility of the bondholder, (ii) the authority of the personal representative, (iii) the information referred to in subclause (b) (ii), (iv) the death of the eligible bondholder. M.R. 33/2003 26 [Repealed] M.R. 33/2003 SCHEDULE [Repealed] M.R. 138/97