Investment Protection Account
Under section 19 (1) of the Small Business Venture Capital Act, a VCC is required to deposit 30% of all investments received into a special account called an Investment Protection Account (IPA).
Funds may be released from this account only with the Administrator’s prior written authorization. Approval for an IPA release is provided at the same time the VCC reports an eligible investment to the Investment Capital Branch.
Establishing an IPA
The following documents must be completed by the VCC to establish an IPA at a financial institution of its choice, and present these documents, along with the "Instructions to Financial Institution for Setting up an IPA", to a financial institution.
The financial institution then opens an IPA and completes the “Financial Institution’s Confirmation”, which provides confirmation to the Investment Capital Branch that the IPA has been established and confirms the amount on deposit.
Documentation confirming the establishment of the IPA must be sent to the Investment Capital Branch within 30 days of the registration date of the VCC.
To apply for the release of IPA funds, a VCC must have made or plans to make an eligible investment.
The VCC may apply for release of funds equal to the lesser of:
- 37.5% of the purchase price of the eligible investment
- the total amount in the IPA