Annual Returns & Audit
Each year an EBC must submit an Annual Return, together with copies of its Financial Statements and Central Securities Register. These are reviewed to ensure the EBC's continued compliance with the program. Annual Returns are due within six months of the EBC's fiscal year-end.
EBCs must submit an Annual Return in each of the 5 consecutive fiscal years following the date of the EBC's most recent issue of shares for which tax credits were issued.
Section 30 of the Small Business Venture Capital Act, authorizes the Investment Capital Branch to conduct random examinations of an EBC's records. The majority of EBCs are audited at least once by the Investment Capital Branch's auditors during the time they are registered in the program.
EBCs that are found to be in contravention of the Act may have their registration in the program suspended or revoked. Failure to correct the action that caused the suspension or revocation may result in the government demanding repayment of tax credits issued.
EBC requirements include the following:
- An Annual Return must be filed in accordance with the Act Section 28.97
- An EBC must not issue shares that carry 50% or more of the votes for the election of directors of the EBC Section 28.3 (1) (c)
- An Eligible Investor (i.e. someone who has received a tax credit) must not own, directly or indirectly, with associates and affiliates, shares carrying 50% or more of the votes for the election of directors of the EBC, or in any way control the EBC Section 28.5 (1) (c)
- An EBC must not use funds for prohibited purposes. Section 28.93
- If a tax credit has been issued for a share, the EBC must not redeem, acquire or cancel the share within 5 years of the share being issued Section 28.91
- An Eligible Investor (i.e. someone who has received a tax credit) must not dispose of their shares within 5 years of their purchase Section 28.92
- An EBC must only issue shares for cash. Shares issued for services rendered or loans converted to shares do not qualify for tax credits Section 28.3 (1) (d)