Terms

Industry Canada
Investment Canada Act

Terms and Conditions for the Venture Capital Exemption

The following terms and conditions are fixed by the Minister responsible for the administration of the Investment Canada Act ("the Act") for the purposes of paragraph 10(l)(b) of the Act:

  1. An investor acquiring voting interests of an entity which carries on a Canadian business may make use of the exemption provision of paragraph 10(1)(b) of the Act, where the investor is in the business of providing, in Canada, venture capital, in accordance with the following terms and conditions.

  2. The terms and conditions under which an investor shall be considered to be in the business of providing, in Canada, venture capital are where, in the ordinary course of the investor's business:

    1. the investor has made venture capital available in Canada for a minimum period of two years immediately preceding the acquisition of voting interests to which the exemption applies,

    2. the investor provides venture capital substantially through the purchase of voting interests or through other unsecured investments or loans that are subordinate to all financing other than voting interests,

    3. no single venture capital investment at original cost normally constitutes more than 20 percent of the investor's total venture capital portfolio,

    4. the investor's investments are made for the purpose of eventual resale and not for the purpose of acquiring permanent control of businesses in which it invests and in anticipation of realizing a capital gain on the resale, and

    5. the investor normally sells the voting interests of any entity that the investor has purchased within ten years of their acquisition.

Further information is available from:

Industry Canada, Investment Review Division
235 Queen Street, 5th Floor West,
Ottawa, Ontario

Telephone: 613-954-1887
Fax: 613-996-2515

Email: investcan@ic.gc.ca