This act established the Crocus Fund in response to capital flight from Manitoba. Like other LSIFs, its primary objective is to retain Manitoba capital in Manitoba and use that capital to create jobs in small Manitoba businesses. Manitoba’s statute is the most explicit out of all the provinces in its desire to encourage a locally owned economy. It requires that the Crocus Fund “promotes capital retention and a stable economy, worker ownership and employment, and continued resident ownership of firms in Manitoba, and…contributes to other goals, such as corporate social responsibility and worker economic education.”
CHAPTER E95
(Assented to July 26, 1991)
WHEREASthe Government of Manitoba and the Manitoba Federation of Labour recognize the need to support economic development and renewal and consider it to be in the public interest to promote long-term capital formation and a broad understanding of local ownership;
ANDWHEREAS it is in the public interest to establish the Crocus Investment Fund (“the Fund”) for the purpose of making investments with a view to earning income and promoting and maintaining
(a)capital retention and economic stability in Manitoba,
(b)employee ownership in Manitoba businesses, and
(c)business continuity, job retention and creation and ownership of Manitoba businesses by Manitobans;
ANDWHEREAS it is intended that the Fund will, among other things, make investments in Manitoba businesses that operate in accordance with ethical policies with respect to employment practices, workplace safety, environmental suitability and other matters;
ANDWHEREAS the Fund is intended to provide investment capital and other financial assistance and other services to Manitoba businesses to enable them to create, maintain and protect jobs;
ANDWHEREAS it is intended every Manitoban who is an individual be entitled to invest in the Fund and be eligible for tax credits;
ANDWHEREAS it is intended that the Fund will provide an opportunity for long-term investment that can be used to supplement employee savings through conventional retirement plans or pension plans;
ANDWHEREAS, through the investment activities of the Fund, investor and employee awareness and knowledge relating to economic and management matters will increase enabling investors and employees to increase their influence on provincial economic development;
NOW THEREFORE HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
Prohibited investments
13(1) Despite any other provision of this Act, unless authorized in writing by the minister the Fund shall not invest any of its investment assets in an ineligible investment and shall not enter into any guarantee or security for the obligations of a corporation, partnership or trust if the shares of the corporation or the interests in the partnership or trust would be an ineligible investment if they were acquired by the Fund at the time the guarantee or security is given.
Ineligible investments
13(2) For the purpose of subsection (1), “ineligible investment” means an ineligible investment as defined in the regulations.
Definitions
13(3) For the purposes of the definition of “ineligible investment”,
“Canadian resource property” means a Canadian resource property as defined in clause 66(15)(c) of the Income Tax Act (Canada); («avoir minier canadien»)
“financial institution” means a corporation, partnership or trust that
(a)is a bank,
(b)is a credit union,
(c)is authorized under the laws of Canada or a province to carry on the business of offering its services as a trustee to the public,
(d)is authorized under the laws of Canada or a province to carry on the business of insurance,
(e)is a trader or dealer in securities,
(f)has as its principal business the lending of money or of the purchasing of debt obligations or any combination thereof,
(g)has as its principal business earning of gross revenue that is rent, royalties, interest, dividends or gains from the disposition of investments, or
(h)has as its principal businesses any combination of the businesses referred to in clauses (a) to (g);
“foreign resource property” means foreign resource property as defined in clause 66(15)(f) of the Income Tax Act (Canada).
Exception
13(4) Where the Fund invests its investment assets or enters into a guarantee or security for the purpose of directly or indirectly promoting employee ownership of a qualified Manitoba business, the definition of “financial institution” shall be read without reference to clause (c) or (d).
S.M. 1997, c. 40, s. 10.
Payroll deduction for share purchase
14(1) Subject to subsection (2), an employer who has been requested to do so in writing by
(a)20% of the Manitoba employees, if the employer has less than 250 Manitoba employees; or
(b)50 Manitoba employees, if the employer has 250 or more Manitoba employees;
shall,for the purpose of facilitating an employee’s purchase of Class “A” Common Shares of the Fund, deduct from the salary or wages of any employee who requests that a deduction be made the amount for the number of pay periods specified in writing by that employee.
Notice to terminate deduction
14(2) If an employee gives notice to an employer in writing that the deduction of amounts from his or her salary or wages referred to in subsection (1) is to cease, the employer shall commencing with the pay period following the giving of the notice cease to make the deduction.
Remittance of deductions
14(3) The employer shall, not later than the 15th day of the month following the month in which the deduction was made, remit the amounts to the Fund together with a statement specifying the amount deducted in respect of each employee, the employee’s name, address, date of birth and social insurance number.
Deemed subscription
14(4) The amount remitted to the Fund by an employer on behalf of an employee is deemed to be a subscription by the employee for as many Class “A” Common Shares, including fractional shares, as may be purchased with that amount.
Amounts deemed to be salary
14(5) Until an amount deducted by the employer with respect to an employee under subsection (1) is remitted to the Fund, the amount is, for the purposes of the rights of the employee, deemed to be salary or wages owed by the employer to the employee and, if the employer fails to remit to the Fund any amount so deducted, the employee shall be entitled to enforce the payment to the employee and for that purpose is entitled to all of the rights of employees in respect of the payment of wages or salaries under any Act of the Legislature.
Valuation
15(1) The fair value of the Class “A” Common Shares of the Fund shall be determined by the Board as at each valuation date.
PART 4
16 to 22 Repealed.
S.M. 1997, c. 40, s. 12.
PART 5
REGULATIONS
Regulations
23 The Lieutenant Governor in Council may make regulations
(a)for the purpose of subsection 4(5), prescribing the circumstances in which the stated capital of the Fund may be reduced;
(b) for the purpose of clause 12(2)(d), prescribing investments in which the Fund may invest its reserve fund;
(c)defining “ineligible investment” for the purpose of section 13;
(d)respecting any other matter that the Lieutenant Governor in Council considers necessary for carrying out the purposes of this Act.
S.M. 1997, c. 40, s. 13.
PART 6
CONSEQUENTIAL AMENDMENTS AND COMING INTO FORCE
24 NOTE: This section contained consequential amendments to The Income Tax Act which are now included in that Act.
C.C.S.M. reference
25 This Act may be cited as The Manitoba Employee Ownership Fund Corporation Act and referred to as chapter E95 of the Continuing Consolidation of the Statutes of Manitoba.
Coming into force
26 This Act comes into force on a day fixed by proclamation.
NOTE: S.M. 1991-92, c. 48 was proclaimed in force March 21, 1992.
SCHEDULE
SHARE CONDITIONS
(Subsection 4(2))
Shareholder voting
1(1) A holder of Class “A” Common Shares, Class “G” Special Shares and Class “L” Special Shares shall be entitled to one vote at any meeting of shareholders of the Fund at which holders of that class of shares are entitled to vote, without regard to the number of shares owned by the holder.
1(2)A holder of Class “I” Special Shares of a series shall only be entitled to vote in accordance with the voting rights attaching to such series of Class “I” Special Shares as established by the Board at the time of their issue.
1(3) The voting rights established by the Board in respect of a series of Class “I” Special Shares shall provide that the holder is limited, except in respect to election of directors, if any, in which that series is entitled to participate, to one vote at any meeting of shareholders of the Fund at which holder of Class “I” Special Shares series is entitled to vote, without regard to the number of shares owned by the holder.
Distributions on dissolution or liquidation
2(1) Subject to the rights of the holders of the Class “I” Special Shares, on the liquidation, dissolution or winding-up of the Fund, the holder of Class “G” Special Shares and the holder of Class “L” Special Shares shall receive rateably, share for share, without preference or distinction the Class “G” liquidation entitlement and the Class “L” liquidation entitlement, respectively, before any further property or assets of the Fund are distributed and, thereafter, subject to the rights of the Class “I” Special Shares, the holders of the Class “A” Common Shares shall be exclusively entitled to receive rateably, share for share, any remaining property or assets of the Fund.
2(2)The holders of Class “I” Special Shares shall be entitled to share in the assets of the Fund on the liquidation, dissolution or winding-up of the Fund in accordance with the rights and any sinking fund or other provisions specified by the Board as permitted by section 4 of this Schedule.
Definitions
2(3) In this section,
“Class”G” liquidation entitlement” means Class “G” liquidation entitlement as defined in the articles of the Fund as amended from time to time under The Corporations Act and subsection 4(3) of this Act; («part de liquidation relative à la cat’gorie “G” »)
“Class “L” liquidation entitlement”, in relation to a Class “L” Special Share, means the amount paid by the holder for the issue of the share. («part de liquidation relative à la cat’gorie “L” »)
S.M. 1993, c. 13, s. 4; S.M. 1997, c. 40, s. 14.
Dividend rights
3(1) The holders of Class “A” Common Shares shall be entitled to receive non-cumulative dividends in an amount determined by the Board from time to time.
3(2) The holder of Class “G” Special Shares shall not be entitled to receive dividends.
3(3)The holders of the Class “I” Special Shares shall be entitled to receive dividends in accordance with the rights specified by the directors of the Fund as permitted by section 4 of this Schedule.
3(4) The holder of Class “L” Special Shares shall not be entitled to receive dividends.
Rights, privileges, restrictions and conditions attaching to Class “I” Special Shares
4(1) The Class “I” Special Shares may at any time and from time to time be issued in one or more series.
4(2)The Board may fix before issue the number of Class “I” Special Shares in each series, the designation, rights, privileges, restrictions and conditions attaching to the Class “I” Special Shares of each series, including, without limitation, any voting rights, any right to receive dividends, which may be cumulative or non-cumulative and variable or fixed and may include provision for the means of determining the amount of such dividends or the dates of payment thereof, any terms and conditions of redemption or purchase, any conversion rights, any rights on the liquidation, dissolution or winding-up of the Fund, any sinking fund provisions, any restrictions on transfer and other provisions not inconsistent with this Act.
4(3) The Class “I” Special Shares of each series may, with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, have such preferences over the Class “I” Special Shares of every other series and be entitled to such preference over the Class “A” Common Shares, Class “G” Special Shares and Class “L” Special Shares as the directors may fix before the issue thereof.
4(4) Upon the creation of any series of Class “I” Special Shares, articles of amendment setting forth the rights, privileges, restrictions and conditions attaching to the Class “I” Special Shares of the series shall be filed under The Corporations Act.
Restrictions on transfer of shares
5(1) Class “A” Common Shares may not be transferred by the holder except by way of
- (i)to the individual,
(ii)to the spouse or a former spouse of the individual,
(iii)to a qualifying trust for the spouse or former spouse,
(iv)to a child, parent, brother or sister of the individual, or
(v)as a consequence of the death of the individual, to the executors, administrators or heirs of the individual or to a designated beneficiary of the trust;
(a)a transfer by an individual to the trustee under a qualifying trust for the individual;
(b)a transfer by an individual to his or her spouse or former spouse;
(b.1)a transfer by a qualifying trust for an individual
- (i)the seventh anniversary of the date the shares were issued, if the shares were issued or irrevocably subscribed and paid for before June 1, 1997, and
(ii)in any other case, the eighth anniversary of the date the shares were issued, or any later date determined in accordance with the by-laws of the Fund; or
(c)a transfer between an individual and his or her child, parent, brother or sister;
(d)a transfer to the executors, administrators or heirs of an individual as a consequence of the death of the individual or the transfer by the executors or administrators of an individual to the heirs of the individual;
(e)a transfer to the Fund upon the repurchase of the holder’s Class “A” Common Shares by the Fund; or
(f)a transfer that occurs on or after
- (i)the holder of the shares, or
(ii)if the holder is a qualifying trust for an individual, the individual.
(g)a transfer necessitated by the occurrence of an event of severe financial hardship in respect of
5(2)Class “G” Special Shares may not be transferred by the holder thereof without the prior approval of the Lieutenant Governor in Council.
5(3)Class “I” Special Shares may not be transferred if such transfer is in contravention of the restrictions on transfer, if any, specified by the directors of the Fund as permitted by section 4 of this Schedule.
5(4)Class “L” Special Shares may not be transferred by the holder without the prior approval of the Lieutenant Governor in Council.
S.M. 1997, c. 40, s. 15.
Repurchase of Class “A” Common Shares and Class “L” Special Shares
6(1) The holder of a Class “A” Common Share shall be entitled to require the Fund to purchase all or part of the holder’s Class “A” Common Shares of the Fund on or after
(a)the fourth anniversary of the date the shares were issued if
(i)the individual to whom or to whose qualifying trust the shares were issued
(A)has reached his or her 60th birthday and is retired on the day the shares are to be repurchased, or
(B)has reached his or her 65th birthday on the day the shares are to be repurchased, and
(ii)the individual or the qualifying trust acquired or irrevocably subscribed and paid for the shares before June 1, 1997;
(b)repealed, S.M. 1993, c. 13, s. 5;
(c)the day the shares are acquired by the holder who acquired them as a consequence of the death of the individual to whom or to whose qualifying trust the shares were issued;
(d)the day that is
(i)the seventh anniversary of the date the shares were issued, if they were issued or irrevocably subscribed and paid for before June 1, 1997, and
(ii)the eighth anniversary of the date the shares were issued, in any other case, or any later date determined in accordance with the by-laws of the Fund; or
(e)the occurrence of an event of severe financial hardship in respect of the holder of the Class “A” Common Share.
6(2)The holder of a Class “A” Common Shares shall be entitled from time to time to require the Fund to purchase any of the holder’s Class “A” Common Shares of the Fund within 60 days after the date upon which such shares were issued to the holder. Where the holder of Class “A” Common Shares requests that the Fund repurchase the shares pursuant to this subsection, the holder shall be deemed to have rescinded his or her subscription for the shares so repurchased and the shares shall be deemed for all purposes never to have been issued.
6(3)Subject to the provisions of The Corporations Act where, pursuant to subsection (1) of this Schedule, a holder of Class “A” Common Shares is entitled to require the Fund to repurchase those shares and has given to the Fund a request that they be repurchased, the Fund shall repurchase the holder’s Class “A” Common Shares on the valuation date immediately following the date upon which the request for their repurchase is tendered on the Fund. If on any valuation date the Fund is not able to repurchase all of the shares for which it has received requests for repurchase, then the Fund shall repurchase rateably amongst the requests it has received, as many of the Class “A” Common Shares as it is lawfully entitled to repurchase, and the balance of shares for which it has received such a request shall be considered to have been tendered for repurchase at the immediately following valuation date.
6(4) On any valuation date, the repurchase price of a Class “A” Common Share shall be
(a)if the repurchase is pursuant to a request made within 60 days after the date upon which a share is issued, the amount of the consideration for which the Class “A” Common Share was issued; and
(b)in any other case, the fair value of a Class “A” Common Share on the valuation date as determined by the Board of the Fund.
6(5) The Fund shall not purchase, redeem or otherwise acquire any of its issued Class “L” Special Shares.
6(6)Where at any time the holder of Class “A” Common Shares gives notice to the Fund requiring the Fund to purchase all or part of those shares pursuant to clause 6(1)(a) of this Schedule, clause 6(1)(a) does not apply to permit the holder to require the Fund to repurchase any Class”A” Common Shares acquired by the holder after the date on which the notice is given.
6(7) Where a Class “A” Common Share was purchased at a time when the holder had reached his or her 65th birthday, clause 6(1)(a) of this Schedule does not apply to permit the holder to require the Fund to repurchase the Class “A” Common Share.
6(8)Where at any time the holder of a Class “A” Common Share gives notice to the Fund requiring the Fund to repurchase all or part of those shares pursuant to subsection 6(1) of this Schedule, the holder shall not be entitled to purchase additional Class “A” Common Shares from the Fund within 24 months from the date on which the notice is given.
S.M. 1993, c. 13, s. 5; S.M. 1994, c. 27, s. 3; S.M. 1997, c. 40, s. 16.
7(1) Repealed, S.M. 1997, c. 40, s. 17.
7(2)For the purpose of clauses 5(1)(g) and 6(1)(e) of this Schedule, the occurrence of an event of severe financial hardship means a period of involuntary loss or interruption of employment which is not compensated through unemployment insurance benefits or workers compensation benefits.
7(3) For the purposes of clauses 5(1)(g) and 6(1)(e) of this Schedule, where a Class “A” Common Share has been acquired by the holder from another person pursuant to the provisions of section 5 of this Schedule, the “occurrence of an event of severe financial hardship” affecting the person from whom the share was acquired shall be deemed to be the occurrence of an event of severe financial hardship affecting the holder.
7(4) The by-laws of the Fund may establish conditions precedent to the right of a holder of Class “A” Common Shares to redeem a Class “A” Common Share upon the occurrence of an event of severe financial hardship.
S.M. 1994, c. 27, s. 4; S.M. 1997, c. 40, s. 17.