The Community Development Bonds Act

The Community Development Bonds Act, C.C.S.M. c. C160 (Assented to July 26, 1991) bilingual version (HTML) Table of Contents Section PART 1 DEFINITIONS, INTERPRETATION AND APPLICATION 1 Definitions APPLICATION 2 Application of The Corporations Act and The Securities Act PART 2 INCORPORATION OF COMMUNITY DEVELOPMENT BOND CORPORATIONS ARTICLES 3 Articles of incorporation 4 Approval of minister and municipality 5 Prohibited names RESTRICTIONS AND LIABILITIES 6 Limitations on corporations 7 Liabilities of directors FEES 8 No fees to be paid REGISTER 9 Register PART 3 COMMUNITY DEVELOPMENT BONDS AND GOVERNMENT GUARANTEES BOND REQUIREMENTS 10 Maximum full term and early term 11 Project development bond provisions 11.1 Investment pool development bond provisions GUARANTEES 12 Payment on guarantee 12.1 Assignment of security interest 13 Rights on payment of guarantee PART 4 ADMINISTRATION REVIEW COMMITTEE 14 Review committee APPROVAL OF DISTRIBUTION OF DEVELOPMENT BONDS 14.1 Application for preliminary approval 15 Application to distribute bonds 16 Review and approval by committee 17 Variation of approval DISTRIBUTION OF DEVELOPMENT BONDS 18 Distribution of bonds 19 Full money consideration for bonds 20 Maximum purchase 21 Proceeds of development bonds APPROVAL OF INVESTMENT 22 Application to invest 23 Review and approval by minister 24 Variation of approval 25 Disbursement of bond sale proceeds 26 Continuing financial disclosure 27 Insider trading APPROVAL OF CONVERSION OR EXCHANGE OF SECURITIES 28 Application to convert or exchange 29 Review by committee, where conversion or exchange allowed PART 5 ENFORCEMENT DUTIES RESPECTING DOCUMENTS 30 Duties respecting documents INSPECTION 31 Inspectors 32 Powers of inspectors POWERS OF MINISTER 33 Order of compliance 34 Order to liquidate or dissolve corporation 35 Appointing receiver or receiver-manager 35.1 Appointing agent to administer investment PART 6 GENERAL 36 Certificate of minister as evidence 37 Immunity from action 38 Regulations 39 Offences and penalties 40 C.C.S.M. reference 41 Coming into force 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 community development bond corporation incorporated in accordance with Part 2; (« corporation émettrice d'obligations ») "court" means the Court of King's Bench; (« tribunal ») "distribute" , when used with reference to community development bonds, means sell, dispose of or otherwise deal in or offer for sale or solicit in respect of, a community 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 community development bonds, means distribution to the public of community development bonds not previously distributed to the public; (« premier placement auprès du public ») "investment pool development bond" means a bond referred to in section 11.1; (« obligation de fonds commun de placement ») "minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; (« ministre ») "municipality" includes (a) a local government district, and (b) as defined under The Northern Affairs Act , (i) an incorporated community, and (ii) in northern Manitoba anywhere other than in an incorporated community, the minister responsible for the administration 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 community development bonds; (« notice d'offre ») "prescribed" means prescribed by regulation; "project development bond" means a bond referred to in section 11; (« obligation de projet ») "review committee" means the Community Development Bonds Review Committee established under section 14; (« Comité d'examen ») "community development bond" means an investment pool development bond or a project development bond; (« obligation de développement communautaire ») "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 community 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 community development bond; (f) any person to whom the personal representative of a deceased individual described in clause (a) transfers the community development bond; (g) a creditor or any person to whom a community development bond is transferred (i) under an agreement in which the community development bond is security for the performance of an obligation, or (ii) under an order of a court; (h) any person to whom a community development bond is transferred by a person described in clause (e), (f) or (g) and any subsequent transferee of that person. Financial institutions excluded 1(3) For the purposes of this Act, a bank, trust company, loan company, credit union or caisse populaire purchasing a community development bond is not an eligible bondholder with respect to that bond. S.M. 1993, c. 48, s. 37 ; S.M. 1995, c. 24, s. 2 ; S.M. 2000, c. 35, s. 77 ; S.M. 2000, c. 48, s. 3 ; S.M. 2006, c. 34, s. 256 . 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 community development bonds and transactions under this Act. S.M. 2000, c. 48, s. 3 . PART 2 INCORPORATION OF COMMUNITY 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 corporation that includes the words (i) "rural development bond corporation", if the corporation is incorporated before September 1, 2000, and (ii) "community development bond corporation", if the corporation is incorporated on or after that day; (b) state that the business of the corporation is restricted to raising capital by means of the sale of community 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 must not be more than 30 years of age on the day the bond corporation is incorporated; (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 Aboriginal and 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 community development bond are invested, or (ii) in the six month period preceding the investment of the proceeds of a community 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. 3(3) and (4) [Repealed] S.M. 2000, c. 48, s. 4 . S.M. 1995, c. 24, s. 3 ; S.M. 2000, c. 35, s. 77 ; S.M. 2000, c. 48, s. 3 and 4. 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 Aboriginal and Northern Affairs. S.M. 2000, c. 35, s. 77 . 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", the words "community 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", the words "community development bond", or any similar words that suggest that the business is one to which this Act applies. S.M. 2000, c. 48, s. 5 . 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 COMMUNITY DEVELOPMENT BONDS AND GOVERNMENT GUARANTEES BOND REQUIREMENTS 10(1) [Repealed] S.M. 1995, c. 24, s. 4 . Maximum full term and early term 10(2) A project 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. S.M. 1995, c. 24, s. 4 . Project development bond provisions 11 A project development bond shall be in a form acceptable to the minister and, in addition to the provisions required by the minister, 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 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, 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 bond; (e) in the case of a bond not issued on the conversion or exchange of an investment pool development bond, a provision that requires the bond corporation to repay on a pro rata basis the proceeds of the sale of 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 bonds were invested, to repay pro rata the principal amount of the bonds, without delay, to the bondholders. S.M. 1995, c. 24, s. 5 . Investment pool development bond provisions 11.1 An investment pool development bond shall be in the form acceptable to the minister and, in addition to the provisions required by the minister, shall contain the following provisions: (a) a provision that requires the bond corporation to commit the proceeds of the sale of its investment pool development bonds to one or more eligible businesses within two years after the closing date of the initial distribution of the bonds; (b) a provision that requires the bond corporation, to the extent that the investment pool development bonds are committed to an eligible business, to convert or exchange those bonds for project development bonds in respect of the eligible business on a pro rata basis; (c) a provision that requires the bondholders, to the extent that the proceeds of the investment pool development bonds are not committed to one or more eligible businesses, to resolve, not later than three months before the expiration of the term referred to in clause (a), to have the bond corporation (i) repay the uncommitted proceeds to the bondholders on a pro rata basis, or (ii) transfer the uncommitted proceeds to a new bond corporation which has been approved to issue and distribute investment pool development bonds under section 15 and which shall issue investment pool development bonds in respect of those proceeds to bondholders on a pro rata basis, and provides that, in default of such resolution, the bondholders are deemed to have resolved to have the bond corporation repay the uncommitted proceeds under subclause (i); (d) a provision setting out the rights, privileges, restrictions and conditions attaching to the bond. S.M. 1995, c. 24, s. 6 . GUARANTEES Payment on guarantee 12(1) Subject to subsections (2) and (3), where a community 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 community development bond. Payment in certain circumstances 12(2) The Government of Manitoba shall pay on its guarantee of a community 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 community development bond that was held by that bondholder for an amount not exceeding the principal amount of the community 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 community development bond referred to in subsection 20(6). Application of payments 12(6) All amounts received by any of the following persons from an eligible business or from the sale of assets of an eligible business shall be applied to reduce the principal amount of the bond issued to finance the eligible business before any amount is applied to the interest payable on the bond: (a) the bond corporation, if the Government of Manitoba has become liable under subsection (2) to pay on its guarantee of the bond; (b) a person appointed under section 35.1; or (c) a receiver or receiver-manager appointed under section 35. S.M. 2000, c. 48, s. 3 and 6. Assignability of security interest 12.1(1) Every security interest granted to a bond corporation in connection with its investment in an eligible business is assignable to the Government of Manitoba as security without the consent of the eligible business. Mandatory assignment of security interest 12.1(2) A bond corporation shall assign to the Government of Manitoba, at the request of the minister, every security interest granted to the corporation in connection with its investment in an eligible business. S.M. 2000, c. 48, s. 7 . Rights on payment of guarantee 13 When the Government of Manitoba pays on its guarantee of a community development bond or purchases a community development bond under subsection 12(4), (a) the Government thereupon becomes the owner of the community 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 community development bond, (ii) hold, dispose of, mortgage, charge or otherwise deal with the community development bond, or (iii) exercise any or all of the Government's rights under a security interest assigned to it under section 12.1. S.M. 1995, c. 24, s. 7 ; S.M. 2000, c. 48, s. 3 and 8. PART 4 ADMINISTRATION REVIEW COMMITTEE Review committee established 14(1) There is hereby established a Community 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 impose such conditions as are provided for in this Part. S.M. 1995, c. 24, s. 8 ; S.M. 2000, c. 48, s. 3 . APPROVAL OF DISTRIBUTION OF DEVELOPMENT BONDS Application for preliminary approval 14.1(1) An application for preliminary approval of the issue and distribution by a bond corporation of community development bonds that are to be subject to a guarantee and a right of repurchase by the government under section 12 may be made to the minister in a form acceptable to the minister (a) by an eligible business, in the case of project development bonds; and (b) by such persons as in the opinion of the minister are appropriate, in the case of investment pool development bonds. Application to include business plan 14.1(2) An application by an eligible business under clause (1)⁠(a) shall include a business plan that complies with subclause 15(1)⁠(f)⁠(ii). Review by minister 14.1(3) The minister may review an application under subsection (1) and, if the minister considers it appropriate, may submit it to the review committee. Review by committee 14.1(4) The review committee, in accordance with the directions of the minister, (a) shall review an application submitted under subsection (3); and (b) may give its preliminary approval to the application, subject to such conditions as the review committee considers advisable. S.M. 1995, c. 24, s. 9 ; S.M. 2000, c. 48, s. 3 . Application to distribute bonds 15(1) A bond corporation that proposes to issue and distribute community 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 a form acceptable to the minister 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 information required by the minister; (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) except in the case of an eligible business to which The Cooperatives Act applies, 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, (D) in the case of an eligible business to which The Cooperatives Act applies, any information requested by the minister respecting memberships or investment shares issued by the eligible business, (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; and (h) [repealed] S.M. 1995, c. 24, s. 10 ; (i) include any other information that the minister or the review committee requires. Exception 15(1.1) An application under subsection (1) is not required to include the business plan described in subclause (1)⁠(f)⁠(ii) in respect of an eligible business if an application under clause 14.1(1)⁠(a) in respect of the eligible business has been approved and any conditions imposed by the review committee relating to the business plan have been met. 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. S.M. 1995, c. 24, s. 10 ; S.M. 2000, c. 48, s. 3 and 9. 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) community 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 community 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 community 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 community development bonds to be approved by the review committee, together with the principal amount of all the community 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. S.M. 2000, c. 48, s. 3 . 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 community development bonds except in accordance with the regulations. S.M. 2000, c. 48, s. 3 . Full money consideration for bonds 19 A bond corporation shall not issue a community development bond for less than its face value or for a consideration other than money. S.M. 2000, c. 48, s. 3 . 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 community development bonds of any bond corporation in an amount exceeding (a) $50,000.; or (b) 10% of the amount of the community 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 community 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 community development bonds are sold, it is necessary to permit that person to hold community 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 community development bonds of the bond corporation not exceeding a specified amount. Joint purchases 20(4) If two or more persons hold a community 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 community 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 community 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 community development bond held by a bondholder, or purchase a community 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. S.M. 1995, c. 24, s. 11 ; S.M. 2000, c. 48, s. 3 . Proceeds of development bonds 21 A bond corporation shall hold the proceeds of the sale of community development bonds, and other money received by it, in the prescribed manner. S.M. 2000, c. 48, s. 3 . APPROVAL OF INVESTMENT Application to invest 22 A bond corporation that has raised capital by the issue and distribution of community development bonds shall, before it invests any of the proceeds of the sale of those bonds in an eligible business, submit an application to the minister in a form acceptable to the minister which shall (a) in the case of an application to invest the proceeds of the sale of project development bonds, (i) identify any material change in the information submitted with respect to the proposed investment in the eligible business (A) in an application under subsection 15(1), and (B) if an application under clause 14.1(1)⁠(a) in respect of the eligible business has been approved, in a business plan included in the application, and (ii) include a signed copy of a financing agreement between the eligible business and the bond corporation setting out particulars of the proposed investment and containing the information required by the minister in a form acceptable to the minister; (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 eligible businesses in which the proceeds of the community 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 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 signed copy of a financing agreement between the eligible business and the bond corporation setting out particulars of the proposed investment and containing the information required by the minister in a form acceptable to the minister; (c) [repealed] S.M. 1995, c. 24, s. 12 ; (d) include any other information that the minister requires. S.M. 1995, c. 24, s. 12 ; S.M. 2000, c. 48, s. 3 ; S.M. 2002, c. 47, s. 2 . Review by minister 23(1) The minister (a) shall review an application made under section 22 for conformity with sound business practice; and (b) may approve the application if he or she is satisfied that the application complies or will comply with clauses 16(4)⁠(a) to (f), any prescribed conditions and any conditions imposed by the minister, including conditions to be met by the eligible business. Effect of conditions to be specified 23(2) If the minister imposes any conditions on an approval under clause (1)⁠(b), the minister 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 minister 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 community development bonds. 23(4) [Repealed] S.M. 1995, c. 24, s. 13 . S.M. 1995, c. 24, s. 13 ; S.M. 2000, c. 48, s. 3 . 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 community development bonds except as provided by regulation. S.M. 2000, c. 48, s. 3 . 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 to the minister in a form acceptable 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 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) 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. S.M. 1995, c. 24, s. 14 ; S.M. 1997, c. 52, s. 18 ; S.M. 2002, c. 47, s. 2 . 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 community 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 community development bonds of those bondholders who wish to convert or exchange their bonds for securities of the eligible business be converted or exchanged. S.M. 2000, c. 48, s. 3 . 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 community development bonds and shall retain them at that location until six years after the date of the redemption, conversion or exchange of the last community 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 community 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. S.M. 2000, c. 48, s. 3 . 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 or receiver-manager 35(1) Subject to subsection (3), the minister may appoint a receiver or receiver-manager of a bond corporation if the minister is satisfied that (a) a circumstance described in clause 34(a) or (b) has arisen with respect to the corporation; (b) an eligible business is in default under the terms of any agreement relating to the corporation's investment in the eligible business; or (c) the Government of Manitoba is, or is about to become, liable under subsection 12(2) to pay on its guarantee of a bond issued by the 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. S.M. 2000, c. 48, s. 10 . Appointment of agent 35.1(1) If (a) an eligible business is in default under the terms of any agreement relating to a bond corporation's investment in the eligible business; or (b) the minister is satisfied that the Government of Manitoba is, or is about to become, liable under subsection 12(2) to pay on its guarantee of a bond issued by a bond corporation; the minister may appoint a person to manage and administer, on behalf of the bond corporation, the corporation's investment, and may establish the terms of the appointment.

Authority of agent 35.1(2) A person appointed to manage and administer an investment under subsection (1) has, subject to the terms of the appointment, the authority to exercise, on behalf of the bond corporation, every right that the bond corporation has in connection with that investment. S.M. 2000, c. 48, s. 11 . 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 community development bonds or transactions under this Act or apply in the manner and to the extent specified; (d) [repealed] S.M. 1995, c. 24, s. 15 ; (e) respecting the distribution of community development bonds; (e.1) respecting the disbursement of proceeds of the sale of community development bonds for the purpose of section 25; (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 community 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 in Council considers necessary or advisable to carry out the intent and purpose of this Act. S.M. 1995, c. 24, s. 15 ; S.M. 2000, c. 48, s. 3 ; S.M. 2026, c. 37, s. 14 . OFFENCES AND PENALTIES Offences 39(1) Every person is guilty of an offence who (a) issues or distributes a community development bond or anything purporting to be a community 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. S.M. 2000, c. 48, s. 3 . COMING INTO FORCE C.C.S.M. reference 40 This Act may be cited as The Community Development Bonds Act and referred to as chapter C160 of the Continuing Consolidation of the Statutes of Manitoba . S.M. 2000, c. 48, s. 40 . Coming into force 41 This Act comes into force on a day fixed by proclamation. NOTE: S.M. 1991-92, c. 47 was proclaimed in force October 21, 1991.