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" (ESB). Prescribed eligible activity requirements are outlined under section 11 of the Small Business Venture Capital Regulation. The eight qualifying activities set out in section 11 of the Regulation are described in the ESB & EBC Policy Statement (gov.bc.ca).
- The venture capital corporation (VCC) may acquire the following eligible investments:
- equity shares of the eligible small business purchased from treasury for cash
- acquiring convertible debt that is prescribed under regulation (prior administrator approval is required)
- acquiring a convertible right/(SAFE) - Simple Agreement for Future Equity
- 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 equity shares held by the VCC must not carry prescribed rights and restrictions
- 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 IPA Release Application and Investment Report (PDF, 88 KB) to notify the Venture Capital Tax Credit Program of each eligible investment made by the VCC.
If a VCC is seeking to invest in an ESB that is not already registered as an Eligible Business Corporation (EBC) in the Province’s Venture Capital Tax Credit Program, then prior to the VCC making its first investment in an ESB, the VCC is required to submit the following documents:
- A completed IPA Release Application and Investment Report (PDF, 88 KB) form;
- A completed ESB Application (PDF, 241 KB) form;
- An updated Central Securities Register of the small business; and
- A summary of the business plan of the small business.
Completed forms may be sent electronically to your Portfolio Manager or to the Venture Capital Tax Credit Program at InvestmentCapital@gov.bc.ca.