Annual Returns & Audit
Each year a VCC must submit an Annual Return, together with copies of its Financial Statements and Central Securities Register. These are reviewed to ensure the VCC's continued compliance with the program.
Annual Returns are due within six months of the VCC's fiscal year-end.
20 For the purposes of section 29 of the Act, a venture capital corporation must, with respect to its most recently ended fiscal year, include the following information in its annual return:
(a) the amount of equity capital raised by the venture capital corporation;
(b) the aggregate value at cost of investments made by the venture capital corporation, the name of each small business the shares of which the venture capital corporation sold and the value at cost of those shares;
(c) the balance held in the investment protection account of the venture capital corporation at the end of the fiscal year;
(d) the aggregate amount of expenses incurred by the venture capital corporation and the amount paid as management fees;
(e) whether any fees or remuneration were paid to the shareholders, officers or directors of the venture capital corporation or to any associate or affiliate of any of them by a small business in which the venture capital corporation made an eligible investment;
(f) whether the articles of the venture capital corporation were amended in a manner that changed the authorized share structure of the venture capital corporation or altered any rights or restrictions attached to any share of the venture capital corporation;
(g) the amount of all dividends received by the venture capital corporation in respect of an eligible investment made by it in a small business;
(h) whether the venture capital corporation redeemed any of its shares;
(i) whether a share redemption referred to in paragraph (h) was reported to the administrator;
(j) in relation to a share redemption referred to in paragraph (h) that was not reported to the administrator, the name of each investor whose shares were redeemed, the date of each redemption, the number of shares redeemed in each redemption, the investor's cost of each share redeemed in each redemption and the consideration paid by the venture capital corporation in respect of the redemption;
(k) whether the venture capital corporation paid any expenses to any person or group of persons who, at the time the payment was made, directly or indirectly controlled the venture capital corporation;
(l) whether the venture capital corporation notified the administrator of the occurrence of any events referred to in section 14.
Section 30 of the Small Business Venture Capital Act, authorizes the Investment Capital Branch to conduct random examinations of a VCC's records. The majority of VCCs are audited at least once by the Investment Capital Branch's auditors during the time they are registered in the program.
VCCs 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.
Common issues identified as a result of previous random examinations include:
- Annual returns not filed in accordance with sections 29 of the Act
- Prohibited use of funds in accordance with sections 12 of the Act
Please review the Act & Regulation to ensure the VCC is not operating in a prohibited manner.