For an investment in a small business to qualify as an "eligible investment", a number of requirements set out in the Small Business Venture Capital Act must be met. These requirements include:
- the business must qualify as an "eligible small business"
- the VCC may acquire shares of the eligible small business by:
- purchasing treasury shares for cash
- the conversion of convertible debt that is prescribed under regulation (prior Administrator approval is required)
- the investment must be at risk and at arm's length
- the VCC together with related parties and other VCCs must not control the Small Business
- the shares held by the VCC must not carry prescribed rights and restrictions (see Policy Statement “Equity Shares” (PDF 574KB)
- the maximum all VCCs can invest in a small business (and any affiliates of the small business) is $10 million every two years
A VCC should ensure all requirements are met prior to the investment and request for an IPA Release.
Complete the following report to notify the Investment Capital Branch of each eligible investment made by the VCC.