18 (1) An investment of a labour sponsored investment fund corporation is an eligible investment if, (a) the investment is made in an eligible business; (b) the investment is the purchase from the eligible business by the labour sponsored investment fund corporation of, (i) shares or a qualifying debt obligation issued by the eligible business in exchange for a consideration paid in money, if the eligible business is a corporation, (ii) an ownership interest in the eligible business or a qualifying debt obligation issued by the eligible business in exchange for a consideration paid in money, if the eligible business is a Canadian partnership, or (iii)  Repealed:  2006, c. 9, Sched. C, s. 4 (1). (iv) an option or right granted by an eligible business that is a corporation, in conjunction with the issue of a share or a debt obligation that is an eligible investment, to acquire a share of the eligible business that would be an eligible investment if that share were issued at the time that the option or right was granted; and (c)  Repealed:  2004, c. 31, Sched. 7, s. 7 (2). (d) the investment is not used or intended to be used by the eligible business for the purpose of, (i) relending, (ii) investment in land except land that is incidental and ancillary to the eligible business activity or activities in which the eligible business is primarily engaged, (iii) reinvestment outside Canada, (iv)  Repealed:  1999, c. 9, s. 55 (2). (v) financing the purchase or sale of goods or services provided to the eligible business by or through a shareholder of the labour sponsored investment fund corporation or a person related to a shareholder, unless the labour sponsored investment fund corporation is widely held, (vi)-(viii)  Repealed:  1999, c. 9, s. 55 (2). (ix) the payment of the principal amount of outstanding liabilities owing to shareholders of the labour sponsored investment fund corporation or to persons related to such shareholders, (x) carrying on a business outside Canada, or (xi) any prescribed purpose or use. (e)  Repealed:  1999, c. 9, s. 55 (4). 1992, c. 18, s. 18 (1); 1994, c. 17, s. 85 (1, 2); 1999, c. 9, s. 55 (1-4); 2004, c. 16, s. 1 (2); 2004, c. 31, Sched. 7, s. 7 (1, 2); 2006, c. 9, Sched. C, s. 4 (1). Follow-on investments (1.1) Despite subsection (1), an investment of a labour sponsored investment fund corporation is an eligible investment for the purposes of this Part if the following conditions are satisfied: 1. The investment is made after 2004 in a taxable Canadian corporation or Canadian partnership that is no longer an eligible business only because, at the time the investment is made, the corporation or partnership no longer satisfies the requirements of subclauses (d) (i) and (ii) of the definition of “eligible business” in subsection 12 (1). 2. The only reason the investment would not be an eligible investment under this section, in the absence of this subsection, is because the taxable Canadian corporation or Canadian partnership is no longer an eligible business for the reason set out in paragraph 1. 3. The labour sponsored investment fund corporation made and continues to maintain a previous investment in the taxable Canadian corporation or Canadian partnership that was, at the time the investment was made, an eligible investment under the provisions of this section other than this subsection.  2006, c. 9, Sched. C, s. 4 (2). Investments purchased in a wind-up (1.2) Despite subsection (1), an investment of a labour sponsored investment fund corporation is an eligible investment for the purposes of this Part if, (a) the investment was acquired from a labour sponsored investment fund corporation that had previously given notice to the Minister of its proposal to dissolve or wind up; (b) the disposition of the investment was undertaken in the course of and by reason of the dissolution or wind-up; and (c) the investment was, for the purposes of this Part, an eligible investment of the other labour sponsored investment fund corporation immediately before the disposition.  2006, c. 9, Sched. C, s. 4 (2). Same (1.3) An eligible investment described in subsection (1.2) shall be deemed to have a cost to the labour sponsored investment fund corporation that acquired it equal to the fair market value of the investment at the time of the acquisition.  2006, c. 9, Sched. C, s. 4 (2). Interpretation, widely held corporation (2) For the purposes of this section, a labour sponsored investment fund corporation shall be deemed to be widely held if the corporation has ten or more shareholders and no shareholder or related group of which a shareholder is a member owns more than 10 per cent of the issued and outstanding voting shares of the corporation.  1992, c. 18, s. 18 (2); 2004, c. 16, s. 1 (2). Idem (3) In determining the percentage of shares of an eligible business held by a labour sponsored investment fund corporation or in determining whether a labour sponsored investment fund corporation is a majority partner of an eligible business, (a) a voting share of the eligible business held by a shareholder of the labour sponsored investment fund corporation or by a person related to the shareholder, shall be deemed to be held by the labour sponsored investment fund corporation; (b) a partnership interest in an eligible business that is a Canadian partnership owned by a shareholder of the labour sponsored investment fund corporation, or by a person related to the shareholder, shall be deemed to be owned by the labour sponsored investment fund corporation; and (c) an option, warrant or right in respect of a voting share of or a partnership interest in the eligible business issued by a person other than the eligible business and held by a shareholder of the labour sponsored investment fund corporation, or by a person related to the shareholder, shall be deemed to have been exercised and the voting share in respect thereof or the partnership interest shall be deemed to be held by the labour sponsored investment fund corporation.  1992, c. 18, s. 18 (3); 2004, c. 16, s. 1 (2). (4) Repealed:  2011, c. 9, Sched. 7, s. 3. (5)-(7) Repealed:  2004, c. 31, Sched. 7, s. 7 (3). Deemed eligible investment (8) If a labour sponsored investment fund corporation guarantees a qualifying debt obligation issued by an eligible business, the labour sponsored investment fund corporation shall be deemed to have made an eligible investment in the eligible business having a cost equal to 25 per cent of the amount of the debt that was guaranteed by the labour sponsored investment fund corporation at the time the guarantee was given.  2006, c. 9, Sched. C, s. 4 (3). (8.1) Repealed:  2006, c. 9, Sched. C, s. 4 (3). (9) Repealed:  2004, c. 31, Sched. 7, s. 7 (3). Minister’s order (10) Upon application by a labour sponsored investment fund corporation, where the Minister is satisfied that it is in the public interest to do so, the Minister may, on such terms and conditions as the Minister considers necessary, order that the non-compliance with clause (1) (b), subclause (1) (d) (iii) or (x) or another prescribed provision does not preclude an investment by the corporation from being an eligible investment.  1994, c. 17, s. 85 (4); 1999, c. 9, s. 55 (6); 2004, c. 16, s. 1 (2); 2005, c. 28, Sched. C, s. 2. Relending, etc., to holding company (11) Despite subclause (1) (d) (i), in the case of an investment in a corporation or partnership described in subsection 12 (1.1), the investment may be used by the eligible business for the purpose of relending to an eligible business or to a related corporation or partnership, but only if the investment is not used or intended to be used by the recipient corporation or partnership in a manner that contravenes clause (1) (d).  2004, c. 31, Sched. 7, s. 7 (4). Contravention of spirit and intent (12) Despite subsection (1) and any order made under subsection (10), if the Minister is of the opinion that a labour sponsored investment fund corporation has directly or indirectly through a transaction or series of transactions contravened the spirit and intent of this Act, the Minister, (a) shall make an order that a particular investment is not an eligible investment as of the date of the transaction or the date of the first transaction in the series of transactions; and (b) may revoke the registration of the labour sponsored investment fund corporation in accordance with section 26 if the Minister has previously made an order referred to in clause (a) in respect of any investment made by the labour sponsored investment fund corporation.  2004, c. 31, Sched. 7, s. 7 (5). Penalty, investment advisor (13) If a labour sponsored investment fund corporation has, by reason of a transaction or series of transactions, contravened a provision of this Act or been found by the Minister under subsection (12) to have contravened the spirit and intent of this Act, the Minister may assess a penalty against every person, other than an employee of the labour sponsored investment fund corporation, who acted on behalf of the labour sponsored investment fund corporation in identifying, investigating, structuring, negotiating the transaction or any transaction in the series of transactions or in administering the investment affairs of the labour sponsored investment fund corporation and who knew or ought to have known that the transaction or series of transactions contravened this Act or was contrary to the spirit and intent of this Act and the amount of any penalty assessed by the Minister shall be, (a) 1.5 per cent of the amount paid by the labour sponsored investment fund corporation in the transaction or series of transactions, up to a maximum of $50,000 on a first contravention; or (b) 3 per cent of the amount paid by the labour sponsored investment fund corporation in the transaction or series of transactions, up to a maximum of $100,000 for each subsequent contravention.  2004, c. 31, Sched. 7, s. 7 (5). Fundamental principles (14) In determining whether an investment contravenes the spirit and intent of the Act, the Minister shall consider the factors that are, in his or her opinion, relevant, including but not limited to the following factors: 1. Whether the labour sponsored investment fund corporation provides direct financial, investment and managerial advice to small and medium-sized Ontario-owned and operated businesses, with the objective of supporting the growth of those businesses. 2. Whether the recipient business has unrestricted access to the capital invested for the operation and development of the business. 3. Whether a material portion of the economic value of the investment for the labour sponsored investment fund corporation is derived, directly or indirectly, from a business other than an eligible business. 4. If an investment has been made indirectly through a subsidiary of the labour sponsored investment fund corporation, whether the subsidiary made a reasonable attempt to invest in small or medium-sized Ontario businesses. 5. Whether a material portion of the investment proceeds were not used by the eligible business before the labour sponsored investment fund corporation disposed of its investment.  2004, c. 31, Sched. 7, s. 7 (5). Section Amendments with date in force (d/m/y) 1994, c. 17, s. 85 - 20/05/1993; 1996, c. 29, s. 11 - 7/05/1996; 1999, c. 9, s. 55 - 14/12/1999 2002, c. 22, s. 21
- 9/12/2002 2004, c. 16, s. 1 (2) - 1/01/2004; 2004, c. 31, Sched. 7, s. 7 - 16/12/2004 2005, c. 28, Sched. C, s. 2 - 12/12/2005 2006, c. 9, Sched. C, s. 4 (1, 3) - 24/03/2006; 2006, c. 9, Sched. C, s. 4 (2) - 29/08/2005 2011, c. 9, Sched. 7, s. 3 - 12/05/2011 Investment levies