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7.0 Model Contract — Investment in Canada
- 7.1. IRB can be derived from activities such as investment in Canada. These investments shall meet the IRB Eligibility Criteria and shall be made directly by the Contractor or its Eligible Party and placed directly with a Canadian recipient.
- 7.1.1. The Contractor will be credited the CCV of future sales resulting from the specific investment, and the amount of the investment, once the Achievement surpasses the amount of the initial investment. The credited future sales will be prorated by multiplying the applicable sales to the ratio of the Contractor's own direct investment in the company relative to that company's Capitalization at the time the investment was made once the accepted IRB credits surpasses the amount of the total investment.
Credited Future Sales =
Applicable Sales XContractor's own direct investment in Canadian Recipient
Canadian Recipient's Capitalization at the time the investment was made - 7.2. The investment shall be for the purchase of equity such as common shares or preferred shares. Use of the investment to purchase debentures is not permitted.
- 7.3. The investment made by the Contractor or its Eligible Parties shall remain placed with the Canadian recipient for a minimum of three (3) years, starting from the date the investment is placed with the recipient. Failure to do so will result in the immediate clawback of all IRB approved credits for the IRB Transaction by the IRB Authority. No further IRB credits will be approved for that particular transaction.
- 7.4. In the event the Contractor or an Eligible Party invests in its own Canadian facilities, the investment and the incremental sales resulting from that investment are eligible for IRB credit, assuming the investment itself is causal to the IRB obligations of the Contractor or Eligible Party. This is also provided that the investment results in a net benefit to Canada and that the transaction does not result in overcapacity, shutdowns of existing companies or losses of prospective sales by existing companies in Canada.
- 7.5. The capital associated with the purchase of a Canadian company that is considered a "going concern" is not an eligible investment for IRB purposes. If the investment is for a Canadian company that has declared bankruptcy, then the investment can be counted for IRB purposes.
- 7.6. Investment transactions may include:
- 7.6.1. the establishment or enhancement of a Canadian facility or project which will develop Canada's advanced technology industries, and provide a capability that does not already exist in Canada. Consideration on the eligibility of the proposed IRB transaction will also be based on whether the transaction results in overcapacity, shutdowns of existing companies or losses of prospective sales by existing companies in Canada; or
- 7.6.2. the development of joint ventures with Canadian firms, which will contribute to their long-term viability and increase sales in both domestic and international markets.
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