Small Business Development Corporations Act, R.S.O. 1990, c. S.12

 

Small Business Development Corporations Act

R.S.O. 1990, CHAPTER S.12

Historical version for the period August 20, 2007 to September 30, 2009.

Note: On a day to be named by proclamation of the Lieutenant Governor, this Act is repealed. See: 1997, c. 10, ss. 49, 50 (3).

Last amendment:  2006, c. 35, Sched. C, s. 122.

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CONTENTS

Definitions and interpretation

1. (1) In this Act,

“associate”, where used to indicate a relationship with any person, means,

(a) any corporation of which such person beneficially owns, directly or indirectly, equity shares carrying more than 10 per cent of the voting rights attached to all equity shares of the corporation for the time being outstanding,

(b) any corporation of which such person serves as an officer or director,

(c) any corporation which is affiliated with associates of such person as otherwise determined under this clause,

(d) any trust or estate in which such person has, in the opinion of the Minister, a substantial beneficial interest,

(e) any trust or estate for which such person serves as trustee or in a similar capacity,

(f) any trust or estate in which associates of such person, as otherwise determined under this clause, have, in the opinion of the Minister, a substantial beneficial interest,

(g) any partner of such person or any participant in a joint venture of which such person is also a participant, or

(h) any member of the family of such person; (“personne qui a un lien”)

“corporation” means any body corporate whether or not it is a corporation to which the Business Corporations Act applies; (“société”)

“debt obligation” means a mortgage, bond, debenture, note or other similar obligation of a corporation, whether secured or unsecured; (“titre de créance”)

“eligible investment” means an investment in a small business that complies with section 9; (“investissement admissible”)

“equity capital” means the amount of consideration paid in money, calculated in the prescribed manner, for which equity shares are issued; (“capitaux propres”)

“equity share” means a share of any class or series of shares of a corporation carrying a voting right either under all circumstances or under circumstances that have occurred and are continuing, other than a share of a class or series that must vote separately by reason of a statutory requirement; (“action participante”)

“member of the family” means, with respect to a person,

(a) his or her spouse,

(b) his or her child,

(c) his or her father, mother, brother or sister or any lawful descendant of such brother or sister,

(d) the brother or sister of his or her father or mother or any lawful descendant of any such brother or sister,

(e) the father, mother or any brother or sister of his or her spouse or any lawful descendant of any such brother or sister,

(f) his or her son-in-law or daughter-in-law,

(g) a person adopted by him or her under the Child and Family Services Act or the spouse or any lawful descendant of such person, or

(h) his or her grandfather or grandmother; (“membre de la famille”)

“Minister” means the Minister of Revenue or such other member of the Executive Council to whom the administration of this Act is assigned; (“ministre”)

“Ministry” means the Ministry of the Minister; (“ministère”)

“Northern and Eastern small business development corporation” means a small business development corporation that may make investments only in small businesses that are primarily located within the geographic boundaries of northern and eastern Ontario as defined in the regulations; (“société pour l’expansion des petites entreprises du Nord et de l’Est”)

“person” means, except as otherwise expressly provided, an individual, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative and includes a corporation; (“personne”)

“prescribed” means prescribed by the regulations; (“prescrit”)

“register” means the register under this Act; (“registre”)

“regulations” means the regulations made under this Act; (“règlements”)

“security” means any share of any class or series of shares or any debt obligation of a corporation; (“valeur mobilière”)

“small business” means a corporation having not more than the prescribed number of employees; (“petite entreprise”)

“small business development corporation” means a corporation registered under this Act; (“société pour l’expansion des petites entreprises”)

“spouse” means spouse as defined in section 29 of the Family Law Act; (“conjoint”)

“stated capital” and “stated capital account” have the same meaning as “stated capital” and “stated capital account” in the Business Corporations Act. (“capital déclaré”, “compte capital déclaré”)

Interpretation, subsidiary corporation

(2) A corporation shall be deemed to be a subsidiary of another corporation if,

(a) it is controlled by,

(i) that other, or

(ii) that other and one or more corporations each of which is controlled by that other, or

(iii) two or more corporations each of which is controlled by that other; or

(b) it is a subsidiary of a corporation that is that other’s subsidiary.

holding corporation

(3) A corporation shall be deemed to be another’s holding corporation if that other is its subsidiary.

affiliated corporation

(4) One corporation shall be deemed to be affiliated with another corporation if one of them is the subsidiary of the other or both are subsidiaries of the same corporation or each of them is controlled by the same person.

Control

(5) Unless otherwise prescribed, a corporation shall be deemed to be controlled by another person or corporation or by two or more corporations if,

(a) shares of the first-mentioned corporation carrying more than 50 per cent of the votes for the election of directors are held, other than by way of security only, by or for the benefit of such other person or by or for the benefit of such other corporations; and

(b) the votes carried by such shares are sufficient if exercised to elect a majority of the board of directors of the first-mentioned corporation.

Calculation of total number of equity shares

(6) In calculating the total number of equity shares of a corporation beneficially owned or controlled, for the purposes of this Act, the total number shall be calculated as the total of all the shares actually owned or controlled, but each share that carries the right to more than one vote shall be calculated as the number of shares equalling the total number of votes carried.

Number of shareholders

(7) In determining the number of shareholders of a corporation, for the purposes of this Act, two or more persons holding the same share or shares jointly shall be counted as one shareholder.

Determination of small business

(8) For the purpose of determining whether or not a corporation is a small business, there shall be taken into account the number of employees of any affiliated corporation.

Offering equity shares to public

(9) For the purposes of this Act, a corporation is offering its equity shares to the public only where,

(a) in respect of any of its equity shares a prospectus has been filed under the Securities Act or any predecessor thereof so long as any of such equity shares are outstanding; or

(b) any of its equity shares have been at any time since the 20th day of May, 1981, listed and posted for trading on any stock exchange in Ontario recognized by the Ontario Securities Commission regardless of when such listing and posting for trading commenced,

except that where, upon the application of a corporation that has fewer than fifteen holders of equity shares, the Commission is satisfied, in its discretion, that to do so would not be prejudicial to the public interest, the Commission may order, subject to such terms and conditions as it may impose, that the corporation shall be deemed to have ceased to be offering its equity shares to the public.  R.S.O. 1990, c. S.12, s. 1.

Register

Register

2. (1) The Minister shall maintain a register of small business development corporations in which he or she shall list all corporations registered under this Act and the register shall be open for public inspection during normal office hours.  R.S.O. 1990, c. S.12, s. 2 (1).

Delegation by Minister

(2) The Minister may delegate in writing any of his or her duties or powers under this Act to any public servant employed under Part III of the Public Service of Ontario Act, 2006.  R.S.O. 1990, c. S.12, s. 2 (2); 2006, c. 35, Sched. C, s. 122.

Registration

Application for registration

3. (1) A corporation incorporated under the Business Corporations Act or any predecessor Act may apply to be registered under this Act by delivering to the Minister a proposal in duplicate no later than May 15, 1993.  R.S.O. 1990, c. S.12, s. 3 (1); 1994, c. 17, s. 137.

Contents of proposal

(2) A proposal shall set out:

1. The name of the corporation.

2. The location of the registered office of the corporation in Ontario, including the street and number, if any.

3. The classes and series of shares, the maximum number of shares that the corporation is authorized to issue of each class and series and the aggregate consideration exceeding which all shares of each class and series may not be issued.

4. The amount of the stated capital account of each class and series of shares issued and the amount of equity capital for which the shares were issued.

5. The amounts and kinds of debt obligations, if any, issued by the corporation.

6. The number of directors of the corporation and the names in full and the residence addresses of each, giving the street and number, if any.

7. The names in full of the officers of the corporation and the residence addresses of each, giving the street and number, if any.

8. Any other matter prescribed to be set out in the proposal.

Articles of incorporation

(3) A proposal shall be accompanied by a certified copy of the corporation’s articles of incorporation and a true copy of any shareholder agreement relating to the corporation.

Execution of proposal

(4) The proposal shall be signed by two officers or one director and one officer of the corporation and certified by affidavit of one of the officers or directors signing the proposal.  R.S.O. 1990, c. S.12, s. 3 (2-4).

Revocation of all registrations

3.1 The registration of every corporation that, on May 6, 1997, is registered as a small business development corporation is revoked.  1997, c. 10, s. 47.

Conditions of registration

4. No corporation shall be registered under this Act unless,

(a) the corporation complies with all provisions of the Business Corporations Act;

(b) the corporation has never previously carried on business;

(c) the articles of the corporation limit the aggregate consideration which the corporation may receive on the issuance of classes and series of equity shares to not more than,

(i) $10,000,000 in the case of a corporation that is offering its equity shares to the public, and

(ii) $5,000,000 in the case of any other corporation;

(d) the articles of the corporation restrict the business of the corporation to assisting in the development of small businesses by,

(i) providing capital through the acquisition and holding of securities as permitted by this Act,

(ii) providing business and managerial expertise to small businesses, or

(iii) in the case of a Northern and Eastern small business development corporation, by providing the assistance described in subclauses (i) and (ii) to small businesses which meet the requirements of clause 9 (1) (a),

or, in the case of a Northern and Eastern small business development corporation, the corporation has provided at the time of registration an undertaking satisfactory to the Minister to file articles of amendment restricting the business of the corporation to assisting in the development of small business in a manner described in subclause (iii);

(e) in the case of a Northern and Eastern small business development corporation, the corporation has included in its English name “(Northern and Eastern)” or in its French name “(du Nord et de l’Est)” or provides an undertaking satisfactory to the Minister at the time of registration to file articles of amendment changing its name to include that designation and to provide the Minister with a certified copy of the articles of amendment;

(f) the total stated capital for classes and series of equity shares issued in consideration for equity capital is at least $25,000; and

(g) the corporation meets such other conditions as may be prescribed.  R.S.O. 1990, c. S.12, s. 4.

No registration

5. (1) A corporation is entitled to registration by the Minister except where,

(a) the applicant fails to comply with section 3 or 4, as the case may be; or

(b) the applicant fails to file the material required by this Act or the regulations.

Refusal to register

(2) Subject to section 28, the Minister may refuse to register a corporation where in the Minister’s opinion the applicant is disentitled to registration under subsection (1) of this section.

Revocation of registration

(3) Subject to section 28, the Minister may refuse to permit a payment from the trust fund established under section 8 or revoke a registration where the registrant fails to comply with any provision of this Act or the regulations.

Surrender of registration

(4) Upon the request of a corporation registered under this Act, the Minister may accept the surrender of the registration of the corporation if,

(a) the corporation pays to the Minister the amount, if any, required to be paid under section 24; and

(b) the corporation files with the Minister the prescribed information and meets such other conditions as may be prescribed.

Corporation deemed registered as Northern and Eastern development corporation

(5) Where a small business development corporation that was registered prior to the 24th day of October, 1985 has,

(a) made investments only in small businesses primarily located within the geographic boundaries of northern and eastern Ontario as defined in the regulations;

(b) met the requirements of clause 4 (e); and

(c) complied fully with this Act, the spirit and intent of this Act and the regulations,

the Minister may, at the corporation’s request, deem the corporation to be registered as a Northern and Eastern small business development corporation and amend the register accordingly.  R.S.O. 1990, c. S.12, s. 5.

Registration

6. If a corporation complies with sections 3 and 4, the Minister shall, when all prescribed fees have been paid,

(a) endorse on each duplicate of the proposal the words “Registered/Inscrit” and the day, month and year of the registration thereof;

(b) file one of the duplicates in his or her office;

(c) place the name of the corporation in the register of small business development corporations; and

(d) issue to the registrants a certificate of registration to which he or she shall affix the other duplicate.  R.S.O. 1990, c. S.12, s. 6.

Capital requirements

7. (1) By the end of its first year of registration under this Act and at all times thereafter, a small business development corporation shall have equity shares issued and outstanding for equity capital of,

(a) at least $50,000 where the small business development corporation is a Northern and Eastern small business development corporation; or

(b) at least $100,000 where the small business development corporation is not a Northern and Eastern small business development corporation,

but not exceeding $10,000,000 where the small business development corporation is offering its equity shares to the public and $5,000,000 in the case of any other small business development corporation.

Investment requirement

(2) Within the first twelve months after the date of issuance of any equity shares of a small business development corporation and throughout the next twelve months, the small business development corporation shall have acquired and maintained eligible investments, the acquisition cost of which shall be an amount, calculated in the prescribed manner, equal to at least 40 per cent of the equity capital received on the issuance of the equity shares.

Idem

(3) After the end of the twenty-fourth month following the date of issuance of equity shares, the small business development corporation shall have acquired and shall maintain eligible investments, the acquisition cost of which shall be an amount, calculated in the prescribed manner, equal to at least 70 per cent of the equity capital received on the issuance of the equity shares.

Idem

(4) Where a grant or tax credit with respect to any equity share has been paid or allowed out of an incentive fund referred to in clause 22 (1) (a) or (b), or out of the new enterprise incentive fund as it was constituted at the date of election formerly required under this Act, each eligible investment referred to in subsections (2) and (3) shall have been made after the 15th day of May, 1984, and shall meet the prescribed conditions of being an eligible investment,

(a) where the small business development corporation is a Northern and Eastern small business development corporation, in a small business primarily located in northern and eastern Ontario where the grant or tax credit was paid or allowed out of the northern and eastern Ontario incentive fund; and

(b) where the small business development corporation is not a Northern and Eastern small business development corporation,

(i) in a small business primarily located in northern and eastern Ontario where the grant or tax credit was paid or allowed out of the northern and eastern Ontario incentive fund prior to the 24th day of October, 1985, or

(ii) in a small business in Ontario where the grant or tax credit was paid or allowed out of the general fund, or the new enterprise fund as formerly constituted.

Idem

(5) For the purposes of this section, where a small business development corporation disposes of an eligible investment, it shall be deemed to maintain the investment for a period of six months following the date of the disposition.  R.S.O. 1990, c. S.12, s. 7.

Trust fund

8. (1) A small business development corporation shall set aside in a trust fund an amount of money,

(a) equal to 30 per cent of all amounts received by it as equity capital where the small business development corporation is a Northern and Eastern small business development corporation; or

(b) equal to 25 per cent of all amounts received by it as equity capital where the small business development corporation is not a Northern and Eastern small business development corporation,

and such trust fund shall be held by a trustee on behalf of the corporation in trust for the corporation and for the Crown jointly to be dealt with in accordance with this section.

Payment out of trust fund

(2) Subject to subsection (4), while any amount is held in trust under subsection (1), the Minister shall permit payment from the fund of an amount equal to,

(a) .4286 of the purchase price paid by the small business development corporation to acquire an eligible investment where the shares of the small business development corporation were issued and fully paid for prior to the 24th day of October, 1985 or where the small business development corporation is a Northern and Eastern small business development corporation; or

(b) .3572 of the purchase price paid by the small business development corporation to acquire an eligible investment where the small business development corporation is not a Northern and Eastern small business development corporation and the shares of the small business development corporation were not issued and fully paid for prior to the 24th day of October, 1985,

provided that the Minister is satisfied that the purchase price of such eligible investment has been paid in full in money or that the amount to be permitted to be paid out by the Minister will be used by the corporation in payment of the purchase price of the eligible investment.

Idem

(3) Subject to subsection (4), while any amount is held in trust under subsection (1), the Minister may permit payment from the fund to a shareholder of the small business development corporation, of an amount calculated in the prescribed manner, when equity shares of the small business development corporation are acquired by the small business development corporation by redemption, purchase or otherwise from such shareholder.

Idem

(4) The money held in trust in accordance with subsection (1) shall not be paid out to any person or corporation unless the Minister has consented in writing to such payment.

Interest

(5) Subject to paragraph 5 of section 24, interest earned on the trust fund established in accordance with subsection (1) shall be paid to the small business development corporation.

Payment out of fund

(6) Where the registration of a small business development corporation is revoked or surrendered, the amount then remaining in the trust fund established under subsection (1) is immediately payable to the Crown, and the receipt of the Minister therefor is a full and sufficient discharge to any trustee for such money or to any other person or corporation having control of the trust funds, for the payment over of such money to the Crown, and such payment is a full and complete discharge to the person or corporation making it and for any claim to such payment by any person or corporation that claims to be entitled to the funds.

Idem

(7) Where any person or corporation fails to make the payment to the Crown required by subsection (6), such person or corporation is liable to the Crown for the amount that should have been paid under subsection (6).

Calculation of trust fund

(8) Despite subsections (1) and (2), where the Minister has paid a grant under subsection 20 (8) or allowed a tax credit under subsection 21 (3), or where an applicant is deemed to have made an investment in equity shares of a small business development corporation under subsection 20 (9) or 21 (4), a small business development corporation shall set aside an amount of money equal to 30 per cent of all amounts received by it as equity capital prior to the 24th day of October, 1985, and the Minister shall permit payment from the fund in accordance with clause (2) (a).  R.S.O. 1990, c. S.12, s. 8.

Exception

(9) This section does not apply to amounts received by a small business development corporation as equity capital from a shareholder who was not eligible to receive a grant or tax credit under this Act.  1994, c. 17, s. 138.

Eligible Investments

Eligible investments

9. (1) An investment shall be an eligible investment if,

(a) the investment is made in a small business and 75 per cent or more of the wages and salaries are paid by the small business,

(i) to employees whose ordinary place of employment is a permanent establishment of the small business located in northern or eastern Ontario where the small business development corporation making the investment is a Northern and Eastern small business development corporation, and

(ii) in respect of operations in Ontario where the small business development corporation making the investment is not a Northern and Eastern small business development corporation;

(b) the investment is made in a small business primarily engaged in,

(i) prescribed manufacturing and processing, or

(ii) prescribed tourist activities, or

(iii) any other business activity that may be prescribed with respect to investment in a business located in northern or eastern Ontario by a Northern and Eastern small business development corporation where the small business development corporation making the investment is a Northern and Eastern small business development corporation, or

(iv) any other prescribed business activity;

(c) the investment is the purchase and acquisition from a small business by the small business development corporation of equity shares issued by the small business but, where the equity shares are issued as part of a transaction involving the purchase or redemption, directly or indirectly, of any previously issued shares of the small business or an affiliated corporation, the investment is an eligible investment only to the extent that the investment represents net new equity capital calculated in the manner prescribed;

(d) the investment is not used by the small business for the purpose of,

(i) relending,

(ii) investment in land except such land as is incidental and ancillary to the prescribed manufacturing and processing, prescribed tourist activities, business activities prescribed with respect to investment in a business located in northern or eastern Ontario by a Northern and Eastern small business development corporation or other prescribed business activity or activities in which the small business is primarily engaged,

(iii) reinvestment outside Canada,

(iv) purchasing or acquiring the securities of any person, or

(v) any prescribed purpose or use;

(e) the total number of equity shares acquired by all shareholders of the small business which are small business development corporations does not exceed 49 per cent of the issued and outstanding equity shares of the small business determined in accordance with subsections (2) and (3);

(f) the investment is made in a small business in which,

(i) the total number of equity shares of the corporation beneficially owned, directly or indirectly, by non-residents or over which non-residents exercise control or direction does not exceed 25 per cent of the total number of issued and outstanding equity shares of the corporation, or

(ii) the total number of equity shares of the corporation beneficially owned, directly or indirectly, by a non-resident or over which he, she or it exercises control or direction, together with other shareholders associated with him, her or it if any, does not exceed 10 per cent of the total number of issued and outstanding equity shares of the corporation;

(g) the investment is made in a small business primarily located within the geographical boundaries prescribed by the regulations where the investment is made by a Northern and Eastern small business development corporation; and

(h) the investment is made in a small business that is not of a type prescribed by regulation.  R.S.O. 1990, c. S.12, s. 9 (1); 1993, c. 27, Sched.

Deemed issued equity shares

(2) For the purposes of clause (1) (e), any additional equity shares that would be issued,

(a) on the exercise of a conversion right attached to an existing debt obligation or outstanding share of the small business; or

(b) on the exercise of any existing option, warrant or right issued or granted by the small business,

shall be deemed to have been issued and to be outstanding equity shares.

Deemed ownership

(3) In determining the percentage of shares of a small business held by a small business development corporation,

(a) equity shares of the small business held by a shareholder of the small business development corporation, and by any associates of such shareholder, shall be deemed to be held by the small business development corporation; and

(b) options, warrants and rights in respect of equity shares of the small business issued by any person other than the small business and held by a shareholder of the small business development corporation, or by any associates of such shareholder, shall be deemed to have been exercised and the equity shares in respect thereof to be held by the small business development corporation.  R.S.O. 1990, c. S.12, s. 9 (2, 3).

Investments

10. (1) A small business development corporation shall maintain its assets in,

(a) eligible investments;

(b) liquid reserves;

(c) equity shares that were eligible investments at the time they were acquired by such small business development corporation;

(d) debt obligations that meet all of the conditions of subsection 9 (1), except clause (c) thereof; or

(e) such other form as may be prescribed.

Liquid reserves

(2) Assets of the corporation maintained in liquid reserves shall be deposited from time to time in any bank listed in Schedule I or II to the Bank Act (Canada), or in any trust corporation or loan corporation that is registered under the Loan and Trust Corporations Act, or with the Province of Ontario Savings Office or in such other investments as may be prescribed, upon such terms and conditions and for such period as the corporation considers expedient.  R.S.O. 1990, c. S.12, s. 10.

Definitions and interpretation

11. (1) In this section and in clause 9 (1) (f),

“corporation” includes an association, partnership or other organization; (“société”)

“non-resident” means,

(a) an individual who is not a resident Canadian,

(b) a corporation incorporated, formed or otherwise organized elsewhere than in Canada,

(c) a corporation that is controlled directly or indirectly by non-residents as defined in clause (a) or (b),

(d) a trust in which non-residents as defined in clause (a), (b) or (c) have more than 50 per cent of the beneficial interest, or

(e) a corporation that is controlled directly or indirectly by a trust mentioned in clause (d); (“non-résident”)

“resident” means an individual, corporation or trust that is not a non-resident. (“résident”)

Idem

(2) For the purpose of clause 9 (1) (f), a shareholder shall be deemed to be associated with another shareholder if,

(a) one shareholder is a corporation of which the other shareholder is an officer or director;

(b) one shareholder is a partnership of which the other shareholder is a partner;

(c) one shareholder is a corporation that is controlled directly or indirectly by the other shareholder;

(d) both shareholders are corporations and one shareholder is controlled directly or indirectly by the same individual or corporation that controls directly or indirectly the other shareholder;

(e) both shareholders are members of a voting trust where the trust relates to shares of a corporation; or

(f) both shareholders are associated within the meaning of clauses (a) to (e) with the same shareholder.  R.S.O. 1990, c. S.12, s. 11.

Prohibited investments

12. (1) A small business development corporation shall not invest or maintain an investment in a security issued by a corporation which is or was at any time a small business if,

(a) any of the shares of such corporation are held by,

(i) a major shareholder or an affiliated corporation or an associate thereof of the small business development corporation,

(ii) an officer or director or an associate thereof of a small business development corporation that proposes to invest or has invested in such corporation or an officer or director or an associate thereof of a major shareholder of such small business development corporation, or

(iii) a voting trust where the trust relates to the shares of the small business development corporation; or

(b) as a result of the investment, more than 49 per cent of the issued and outstanding equity shares of the corporation would be held by small business development corporations, their shareholders and associates of their shareholders; or

(c) such corporation or an associate or affiliated corporation of such corporation or a shareholder of such corporation or an associate or affiliated corporation of such shareholder, directly or indirectly provides, by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of, or in connection with the purchase of shares of the small business development corporation; or

(d) as a result of the investment, the aggregate of,

(i) the issue price of all outstanding shares, and

(ii) the balance of all outstanding debt obligations,

of the corporation and its affiliates held by small business development corporations would exceed $2,500,000; or

(e) the security issued to the small business development corporation entitled the holder thereof to claim a credit against income tax payable under the Income Tax Act (Canada) with respect to the purchase of such security.

Restriction on investment

(2) Unless a small business development corporation is widely held, it shall not invest in a small business if the proceeds of that investment are used or are intended to be used, in whole or in part, to finance the purchase or sale of goods or services provided to such small business by or through any shareholder of the small business development corporation or any associate or affiliated corporation of such shareholder.

Interpretation

(3) For the purposes of this section,

(a) “major shareholder” means a person who holds,

(i) 20 per cent where the small business development corporation is a Northern and Eastern small business development corporation, or

(ii) 10 per cent where the small business development corporation is not a Northern and Eastern small business development corporation,

or more of the voting rights attached to all equity shares of the small business development corporation from time to time outstanding;

(b) a small business development corporation is widely held if the corporation has,

(i) five or more shareholders, each holding not more than 20 per cent of the issued and outstanding shares of the corporation, where the small business development corporation is a Northern and Eastern small business development corporation, or

(ii) ten or more shareholders, each holding not more than 10 per cent of the issued and outstanding equity shares of the corporation, where the small business development corporation is not a Northern and Eastern small business development corporation,

and none of the shareholders is an associate or affiliated corporation; and

(c) where the small business development corporation is a Northern and Eastern small business development corporation, “associate” means, in addition to the definitions set out in clauses (b) to (h) of the definition of “associate” in subsection 1 (1), any corporation of which such person beneficially owns directly or indirectly equity shares carrying more than 20 per cent of the voting rights attached to all equity shares of the corporation for the time being outstanding.  R.S.O. 1990, c. S.12, s. 12.

Material change

13. (1) In this section, a material change occurs if the investment of a small business development corporation ceases to be an eligible investment.  R.S.O. 1990, c. S.12, s. 13 (1).

Notification

(2) A small business development corporation shall notify the Minister in the form approved by the Minister of any material change in any of its investments within thirty days of the occurrence thereof.  R.S.O. 1990, c. S.12, s. 13 (2); 1997, c. 19, s. 24 (1).

Eligible investment

(3) Where there is a material change, the investment by a small business development corporation shall remain an eligible investment, notwithstanding any other provision of this Act except subsection 12 (1), for a period of two years from the date of the material change.

Where prescribed number of employees exceeded

(4) Despite subsection (3), where a material change occurs by reason only of a small business exceeding the prescribed number of employees, no material change shall be deemed to have occurred until the small business and any affiliated corporations have more than the prescribed number of maximum permitted employees, determined in the prescribed manner.

Eligible investment

(5) Where a material change described in subsection (4) occurs the investment by a small business development corporation shall remain an eligible investment, despite any other provision of this Act, for a period of five years from the date of the material change.  R.S.O. 1990, c. S.12, s. 13 (3-5).

Restriction on disposition of equity shares

14. (1) No equity shares and no option or right to acquire equity shares of a small business or of a corporation that has ceased to be a small business or an eligible investment shall be transferred or granted by a small business development corporation without first granting to all other holders of the equity shares of such small business or corporation the right to acquire the whole or any part of such equity shares, option or right upon the same terms and conditions.

Proviso

(2) Only a holder of equity shares that is not a small business development corporation may exercise the right to acquire equity shares, options or rights under subsection (1).  R.S.O. 1990, c. S.12, s. 14.

Auditors

15. Despite section 148 of the Business Corporations Act, every corporation in respect of a financial year or any part thereof during which the corporation was registered under this Act shall comply with the requirements of Part XII of the Business Corporations Act regarding the appointment and duties of an auditor and the corporation shall submit to the Minister within six months after the end of each financial year its financial statements for the year and the auditor’s report thereon.  R.S.O. 1990, c. S.12, s. 15.

Information

Returns

16. (1) Within ninety days after each anniversary of the date of its registration, every small business development corporation shall prepare, verify and file with the Minister, a return in the form approved by the Minister setting out, as of its anniversary date, the information required by such return.  R.S.O. 1990, c. S.12, s. 16 (1); 1997, c. 19, s. 24 (1).

Notice to Minister

(2) A small business development corporation shall notify the Minister, in the form approved by the Minister, of any proposed action involving,

(a) any arrangement described under clauses 181 (1) (a) to (i) of the Business Corporations Act that it proposes to place before its shareholders for approval;

(b) any action by the corporation which would have the effect of reducing the stated capital account of any class or series of equity shares;

(c) the purchase, surrender, redemption or conversion of any equity share of the corporation;

(d) the disposition or sale of any eligible investment; or

(e) the entering into, or amendment of, any shareholder agreement relating to the small business development corporation or any corporation in which the small business development corporation maintains an investment,

at least twenty-one days prior to carrying out the proposed action.  R.S.O. 1990, c. S.12, s. 16 (2); 1997, c. 19, s. 24 (1).

Enlargement of time by Minister

(3) The Minister may, in his or her discretion, enlarge the time for filing any notice or return under this section.  R.S.O. 1990, c. S.12, s. 16 (3).

Information required by the Minister

17. The Minister may at any time by notice require any small business development corporation or any corporation in which the small business development corporation has invested to file within the time specified in the notice a return upon any subject connected with its affairs and, in the opinion of the Minister, relevant to the administration or enforcement of this Act.  R.S.O. 1990, c. S.12, s. 17.

Investment Incentives

Exemption from capital tax

18. Where a small business development corporation is registered under this Act, the corporation is not liable for the tax imposed by Part III of the Corporations Tax Act, with respect only to the maximum equity capital amount set out in clause 4 (c) and retained earnings thereon.  R.S.O. 1990, c. S.12, s. 18; 2004, c. 16, Sched. D, Table.

Incentives

19. (1) Subject to subsections (2) and (3) of this section and subsection 5 (4), where a person or a corporation complies with the provisions of this Act, the Minister may make a grant under section 20 or allow a tax credit under section 21.

Idem

(2) The Minister shall not make a grant under section 20 or allow a tax credit under section 21 to any shareholder of a small business development corporation if the small business development corporation has,

(a) failed to establish and maintain a trust fund to the satisfaction of the Minister in accordance with section 8; or

(b) designated any of its issued securities to be a type of security entitling the holder thereof to claim a credit against income tax payable under the Income Tax Act (Canada) with respect to the purchase of such security.

Revocation of registration or refusal of grant

(3) Subject to section 28, where the Minister is of the opinion that the small business development corporation, its officers or directors, or its shareholders are conducting their business and affairs in a manner that is contrary to the spirit and intent of this Act or for the purpose of obtaining a grant or tax credit to which they would not otherwise be entitled, the Minister may,

(a) revoke the registration of the small business development corporation;

(b) refuse to pay a grant under section 20 or allow a tax credit under section 21; or

(c) refuse to permit a payment from the trust fund established under section 8.

Saving

(4) Where a small business development corporation does not comply with the provisions of this Act or the regulations, but the Minister is of the opinion that the corporation is meeting the spirit and intent of this Act, the Minister may, for such time as in his or her opinion is appropriate, refrain from revoking the registration of any corporation.  R.S.O. 1990, c. S.12, s. 19.

Payment of grant

20. (1) Subject to subsections (2) and (3), a person who is the beneficial and registered owner of equity shares of a small business development corporation may make an application in the form prescribed by the Minister for a grant and the Minister may pay a grant equal to,

(a) 30 per cent in the case of shares of a Northern and Eastern small business development corporation; or

(b) 25 per cent in the case of shares of a small business development corporation that is not a Northern and Eastern small business development corporation,

of the amount of money actually paid by the applicant to the small business development corporation for equity shares issued to the applicant by that corporation.  R.S.O. 1990, c. S.12, s. 20 (1).

Idem

(2) No grant shall be paid by the Minister under subsection (1) unless,

(a) the equity shares are purchased or acquired directly from the corporation issuing the equity shares;

(b) the applicant is ordinarily resident in Ontario; and

(c) the applicant has made an application no later than July 1, 1993.  R.S.O. 1990, c. S.12, s. 20 (2); 1994, c. 17, s. 139.

Supporting material

(3) An application under subsection (1) shall be accompanied by,

(a) a certificate containing the prescribed information signed by the secretary and one authorized officer of the small business development corporation that has issued the equity shares in respect of which a grant is sought; and

(b) such additional material as may be prescribed by the Minister.

Definition

(4) In this section and in section 19,

“person” means an individual, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative that is ordinarily resident in Ontario, but does not include a partnership, association, syndicate, organization or trust that has a corporation as one of its members or beneficiaries.

Pension funds

(5) Despite anything in this section, a pension fund with 10 per cent or more of its contributors resident in Ontario that meets the prescribed terms and conditions shall be deemed to be a person ordinarily resident in Ontario.

Grants to corporations

(6) Despite anything in this section, a corporation incorporated as a credit union or caisse populaire under the Credit Unions and Caisses Populaires Act, or a predecessor of that Act, and such other corporations as may be prescribed, may apply for and receive a grant under subsection (1) in lieu of a tax credit under section 21.

Where applicant not the beneficial owner

(7) When the person applying for a grant under subsection (1) is the registered, but not the beneficial, owner of equity shares of a small business development corporation, the Minister may prescribe the terms and conditions relating to the beneficial ownership of the shares that shall be complied with in order to entitle the person to the grant.

Transitional

(8) Despite subsection (1), the Minister may pay a grant equal to 30 per cent of the amount of money actually paid by the applicant to the small business development corporation for equity shares where the Minister is satisfied that the shares were fully paid for and issued to the applicant by the small business development corporation prior to the 24th day of October, 1985.

Idem

(9) Where, prior to the 24th day of October, 1985,

(a) the Minister has consented in writing to the repayment of any advance owing to a shareholder of a small business development corporation in accordance with provisions prescribed under subclause 9 (1) (d) (v); and

(b) a substantial portion of the advance approved by the Minister has been made,

an application for a grant under subsection (1) shall be treated as if an investment equal to the full amount of the advance approved by the Minister was paid by the applicant to the small business development corporation for equity shares that were fully paid for and issued to the applicant prior to the 24th day of October, 1985.  R.S.O. 1990, c. S.12, s. 20 (3-9).

Tax credit

21. (1) Subject to subsection (2), a corporation that is the beneficial and registered owner of equity shares of a small business development corporation may, subject to the approval of the Minister, deduct from the tax otherwise payable by it under Part II of the Corporations Tax Act, an amount equal to,

(a) 30 per cent in the case of shares of a Northern and Eastern small business development corporation; or

(b) 25 per cent in the case of shares of a small business development corporation that is not a Northern and Eastern small business development corporation,

of the amount of money actually paid by the corporation to the small business development corporation for equity shares issued to it by the corporation.  R.S.O. 1990, c. S.12, s. 21 (1); 2004, c. 16, Sched. D, Table.

Same

(1.1) No corporation may deduct from tax otherwise payable under Part II of the Corporations Tax Act an amount under subsection (1) unless the corporation has requested the approval of the Minister for the deduction on or before July 1, 1993.  1994, c. 17, s. 140; 2004, c. 16, Sched. D, Table.

Supporting material

(2) Where a corporation claims a tax credit under subsection (1), the annual return required under section 75 of the Corporations Tax Act, in which the credit is claimed shall be accompanied by,

(a) a certificate containing the prescribed information signed by the secretary and one authorized officer of the small business development corporation that has issued the equity shares in respect of which a tax credit is sought; and

(b) such additional material as may be prescribed by the Minister.  R.S.O. 1990, c. S.12, s. 21 (2); 2004, c. 16, Sched. D, Table.

Transitional

(3) Despite subsection (1), the Minister may approve the deduction by a corporation from the tax otherwise payable by it under Part II of the Corporations Tax Act of an amount equal to 30 per cent of the amount of money actually paid by the corporation to the small business development corporation for equity shares where the Minister is satisfied that such shares were fully paid for and issued to the corporation by the small business development corporation prior to the 24th day of October, 1985. R.S.O. 1990, c. S.12, s. 21 (3); 2004, c. 16, Sched. D, Table.

Idem

(4) Where, prior to the 24th day of October, 1985,

(a) the Minister has consented in writing to the repayment of any advance owing to a shareholder of a small business development corporation in accordance with provisions prescribed under subclause 9 (1) (d) (v); and

(b) a substantial portion of the advance approved by the Minister has been made,

an application for a tax credit under subsection (1) shall be treated as if an investment equal to the full amount of the advance approved by the Minister was paid by the applicant to the small business development corporation for equity shares that were fully paid for and issued to the applicant prior to the 24th day of October, 1985.  R.S.O. 1990, c. S.12, s. 21 (4).

No liability

21.1 No proceeding described below shall be instituted, or if already instituted, shall proceed against Her Majesty in right of Ontario, the Minister, the Deputy Minister or any officer or employee of the Ministry:

1. A proceeding for the payment of a grant or tax credit under this Act.

2. A proceeding for damages for the failure to pay a grant or tax credit under this Act.

3. A proceeding for any costs incurred in respect of making an application for a grant or tax credit under this Act.  1994, c. 17, s. 141.

Incentive funds

22. (1) The money appropriated by the Legislature for the payment of grants and the allowance of tax credits under this Act shall be held by the Minister in accordance with subsection (2) in separate funds, being,

(a) the northern and eastern Ontario incentive fund; and

(b) the general fund.

Allocation to incentive funds

(2) The amount or percentage of the money appropriated by the Legislature for the payment of grants and the allowance of tax credits under this Act that shall be allocated in each year to the incentive fund described in clause (1) (a) shall be the amount or percentage that is from time to time specified by order of the Lieutenant Governor in Council made on the recommendation of the Treasurer of Ontario and Minister of Economics.

Payment from funds

(3) The Minister shall make a grant or allow a tax credit to a shareholder of a small business development corporation with respect to each equity share issued on or after the 24th day of October, 1985,

(a) from the fund described in clause (1) (a), where the small business development corporation that issued the share is a Northern and Eastern small business development corporation; or

(b) from the fund described in clause (1) (b), where the small business development corporation that issued the share is not a Northern and Eastern small business development corporation.  R.S.O. 1990, c. S.12, s. 22.

Tax credit carried back or forward

23. The unused portion of a tax credit obtained under subsection 21 (1), not exceeding the tax payable for the preceding taxation year under Part II of the Corporations Tax Act, may be,

(a) carried back by the corporation and added to the amount paid on account of the tax payable by the corporation for the taxation year immediately preceding the taxation year in which the credit is earned; or

(b) if, after making the deduction in clause (a), any unused portion of the tax credit remains, carried forward by the corporation and deducted from the tax otherwise payable by the taxpayer under Part II of the Corporations Tax Act in subsequent taxation years.  R.S.O. 1990, c. S.12, s. 23; 2004, c. 16, Sched. D, Table.

Recovery of grant or tax credit

24. (1) Where a small business development corporation proposes to wind up or dissolve, or where its registration is revoked or surrendered, or any of its equity shares are purchased or otherwise acquired by the small business development corporation, the small business development corporation shall immediately pay to the Minister an amount of money calculated according to the following rules:

1. Where an equity share of the small business development corporation is purchased or otherwise acquired by the small business development corporation for a total consideration equal to or greater than that for which the share was issued, the small business development corporation shall pay to the Minister an amount equal to,

(a) in the case of an equity share of a small business development corporation issued and fully paid for prior to the 24th day of October, 1985,

(i) 30 per cent where, at the time of purchase or acquisition, the small business development corporation does not maintain at least 70 per cent of its assets in the form of eligible investments or is not complying fully with this Act, the spirit and intent of this Act or the regulations, or

(ii) 25 per cent where, at the time of purchase or acquisition, the small business development corporation is maintaining at least 70 per cent of its assets in the form of eligible investments and is complying fully with this Act, the spirit and intent of this Act and the regulations,

of the consideration paid to the corporation by the shareholder for the share at the time it was issued; or

(b) in the case of an equity share of a small business development corporation issued and paid for on or after the 24th day of October, 1985, an amount equal to,

(i) 30 per cent where the share is a share of a Northern and Eastern small business development corporation, or

(ii) 25 per cent where the share is a share of a small business development corporation that is not a Northern and Eastern small business development corporation,

of the consideration paid to the corporation by the shareholder for the share at the time the share was issued.

2. Where an equity share of the small business development corporation is purchased or otherwise acquired by the small business development corporation for a total consideration that is less than that for which the share was issued, the small business development corporation shall pay to the Minister,

(a) in the case of an equity share of a small business development corporation issued and fully paid for prior to the 24th day of October, 1985, an amount of money equal to,

(i) .4286 where, at the time of purchase or acquisition, the small business development corporation does not maintain at least 70 per cent of its assets in the form of eligible investments or is not complying fully with this Act, the spirit and intent of this Act or the regulations, or

(ii) .3572 where, at the time of purchase or acquisition, the small business development corporation is maintaining at least 70 per cent of its assets in the form of eligible investments and is complying fully with this Act, the spirit and intent of this Act and the regulations,

of the gross consideration paid by the corporation for the purchase or acquisition of the share; or

(b) in the case of an equity share of a small business development corporation issued and paid for on or after the 24th day of October, 1985, an amount equal to,

(i) .4286 where the share is a share of a Northern and Eastern small business development corporation, or

(ii) .3572 where the share is a share of a small business development corporation that is not a Northern and Eastern small business development corporation,

of the gross consideration paid by the corporation for the purchase or acquisition of the share.

3. Where the registration of a small business development corporation is revoked or surrendered or where the corporation proposes to wind up or dissolve, it shall pay the Minister,

(a) in the case of a small business development corporation registered prior to the 24th day of October, 1985,

(i) where, at the time of the revocation, surrender, winding up or dissolution, the small business development corporation is not maintaining 70 per cent of its assets in the form of eligible investments or is not complying with this Act, the spirit and intent of this Act and the regulations, an amount equal to,

(A) 30 per cent of the value of all of the small business development corporation’s shareholders’ equity to an amount not exceeding the aggregate of the grants or tax credits made or allowed by the Minister in respect of all shares issued and outstanding prior to the 24th day of October, 1985,

(B) 25 per cent of the value of all of the small business development corporation’s shareholders’ equity to an amount not exceeding the aggregate of the grants or tax credits made or allowed by the Minister in respect of all equity shares issued on or after the 24th day of October, 1985,

and outstanding at the time of revocation, surrender, winding up or dissolution, calculated in the manner prescribed, or

(ii) 25 per cent of the value of all the small business development corporation’s shareholders’ equity to an amount not exceeding the aggregate of the grants or tax credits made or allowed by the Minister in respect of all equity shares issued and outstanding at the time of the revocation, surrender, winding up or dissolution, calculated in the manner prescribed, where, at the time of the revocation, winding up or dissolution, the small business development corporation is maintaining 70 per cent of its assets in the form of eligible investments and is complying with this Act, the spirit and intent of this Act and the regulations;

(b) in the case of a small business development corporation registered after the 24th day of October, 1985, an amount equal to,

(i) 30 per cent where the share is a share of a Northern and Eastern small business development corporation, or

(ii) 25 per cent where the share is a share of a small business development corporation that is not a Northern and Eastern small business development corporation,

of the value of all of the small business development corporation’s shareholders’ equity to an amount not exceeding the aggregate of the grants or tax credits made or allowed by the Minister in respect of all equity shares issued and outstanding at the time of revocation, surrender, winding up or dissolution calculated in the manner prescribed.

4. Subject to paragraph 6, where a small business development corporation reduces by any other means the stated capital account of any class or series of equity shares, the small business development corporation shall pay to the Minister,

(a) in the case of a reduction of stated capital with respect to shares issued prior to the 24th day of October, 1985, an amount equal to the lesser of the aggregate of the grants and tax credits made or allowed by the Minister in respect of all equity shares previously issued by the small business development corporation less any amounts previously paid to the Minister under this section and either,

(i) 30 per cent of the amount of the reduction to the stated capital accounts where, at the time of the reduction of stated capital, the small business development corporation does not maintain at least 70 per cent of its assets in the form of eligible investments or is not complying fully with this Act, the spirit and intent of this Act or the regulations, or

(ii) 25 per cent of the amount of the reduction to the stated capital accounts where, at the time of the reduction of stated capital, the small business development corporation is maintaining at least 70 per cent of its assets in the form of eligible investments and is complying fully with this Act, the spirit and intent of this Act and the regulations;

(b) in the case of a reduction of stated capital with respect to shares issued on or after the 24th day of October, 1985, an amount of money equal to the lesser of the aggregate of the grants and tax credits made or allowed by the Minister in respect of all equity shares previously issued by the small business development corporation less any amounts previously paid to the Minister under this subsection and either,

(i) 30 per cent of the amount of the reduction to the stated capital accounts where the share is a share of a Northern and Eastern small business development corporation, or

(ii) 25 per cent of the amount of the reduction to the stated capital accounts where the share is a share of a small business development corporation that is not a Northern and Eastern small business development corporation,

and a reduction of stated capital or a reduction to the stated capital accounts shall include any amount paid, or payable to the Minister under this section.

5. Where a small business development corporation proposes to wind up or dissolve or where the registration of the small business development corporation is revoked or its registration is surrendered, the small business development corporation shall immediately pay to the Minister an amount of money, in addition to any other amount under this section, equal to the interest earned on all money paid into the trust account established by the small business development corporation under section 8 and not paid out in accordance with subsection 8 (2) or (3) from the date of registration of the corporation under this Act.

6. No amount is payable to the Minister if the reduction to stated capital does not exceed real and unrealized losses associated with assets permitted to be held under section 10 and no reduction in stated capital has been made previously in respect of such losses.

7. For the purposes of this section, the amount to be paid by the small business development corporation to the Minister shall be calculated only with reference to equity shares on which a grant has been paid or a credit has been allowed under this Act and in respect of which no amount has been paid to the Crown under section 32.

8. For the purposes of this section, “shareholders’ equity” means the aggregate of,

(a) the stated capital of all classes and series of equity shares;

(b) the retained earnings or deficit of the small business development corporation as adjusted to exclude,

(i) any prior losses from investments in assets not permitted under this Act,

(ii) any prior losses from activities not authorized by the articles of incorporation,

(iii) an amount equal to any prior profits less prior dividends paid and payable, to the extent that such amount does not exceed the amount of any prior losses from investments in assets permitted under section 10,

(iv) the amount of any prior dividends paid or dividends payable which have rendered or will render the small business development corporation insolvent within the meaning of the Business Corporations Act or which diminished or will diminish its capital, and

(v) expenses paid to an officer, director, shareholder or associate of the small business development corporation, or to an associate of any such officer, director or shareholder, to the extent that such expenses are, in the opinion of the Minister, unreasonable; and

(c) such other amounts as may be prescribed.

9. A small business development corporation shall be deemed to have disposed of all its assets at fair market value immediately prior to the revocation or surrender of its registration, its winding up or dissolution for the purpose of determining prior losses or prior profits under clause (b) of paragraph 8.  R.S.O. 1990, c. S.12, s. 24.

Relief from liability

(2) If the registration of a small business development corporation is revoked by section 3.1, amounts otherwise payable under subsection (1) as a result of the revocation are not payable if the corporation is in substantial compliance with this Act on May 5, 1997 and the Minister is of the opinion that the corporation is meeting the spirit and intent of this Act.  1997, c. 10, s. 48.

Same

25. The amount to be paid to the Minister by the small business development corporation under section 24 shall be deemed to be a tax imposed upon the corporation under the Corporations Tax Act and may be collected and enforced in accordance with the provisions of that Act.  R.S.O. 1990, c. S.12, s. 25; 2004, c. 16, Sched. D, Table.

Share certificate

26. Every share certificate in respect of equity shares issued by a small business development corporation shall conspicuously state upon its face the words, “The value of the shares represented by this certificate may be significantly affected by recapture provisions under the Small Business Development Corporations Act” if the share certificate is in English or “La valeur des actions représentées par ce certificat peut être affectée de façon significative par les dispositions relatives à la récupération visées à la Loi sur les sociétés pour l’expansion des petites enterprises” if the share certificate is in French.  R.S.O. 1990, c. S.12, s. 26.

Demand for payment

27. (1) Where any amount is payable to the Crown or is deemed to be payable to the Crown under this Act, the Minister may, by Notice of Demand in writing to the person or corporation by whom such payment is owing or claimed to be owing, demand payment immediately or in such number of days as are specified in the demand, and if the payment is not made as demanded, the Minister may recover and collect the amount thereof by any of the remedies or procedures provided for in this Act.

Liability for payment not affected

(2) Despite the fact that an objection or other proceeding under section 28 has been commenced or may be commenced, every amount demanded to be paid under subsection (1) remains payable and recoverable until the demand therefor is revoked in writing by the Minister.  R.S.O. 1990, c. S.12, s. 27.

Disputes

Proposal by Minister

28. (1) Where the Minister proposes,

(a) to refuse to register a corporation under this Act;

(b) to revoke the registration of a small business development corporation;

(c) to refuse to permit payment from the trust fund established under section 8 where that refusal does not result from a determination by the Minister that any investment or proposed investment is ineligible under this Act;

(d) to refuse to make a grant under section 20; or

(e) to refuse to allow a tax credit under section 21,

he or she shall serve notice of his or her proposal, together with written reasons therefor on the applicant or registrant.

Registration deemed refused

(2) If the Minister has not registered a corporation under section 5 within four months of the date on which the corporation delivered a proposal under section 3, the Minister shall be deemed to have refused registration under clause (1) (a).

Objection

(3) Where a person or corporation objects to a proposal under subsection (1) that is served on them, they may, within sixty days from the day of mailing of the proposal or the date upon which the Minister has been deemed to have refused registration under subsection (2), serve on the Minister a notice of objection in duplicate in the prescribed form setting out the reasons for the objection and all relevant facts.

Service

(4) A notice of objection under this section shall be served by being sent by registered mail addressed to the Minister.

Idem

(5) The Minister may accept a notice of objection under this section despite the fact that it was not served in the manner required.

Action on proposal

(6) Where an applicant or registrant does not serve a notice of objection under subsection (3), the Minister may carry out the proposal stated in his or her notice under subsection (1).

Reconsideration

(7) Upon receipt of the notice of objection, the Minister shall with all due dispatch reconsider the proposal objected to and confirm, vary or abandon the proposal, and he or she shall thereupon notify the person or corporation making the objection of his or her action by registered mail.

Where decision final

(8) A decision of the Minister under subsection (7) is final and is not subject to appeal except where the decision involves the interpretation of a provision of this Act, or involves an issue solely of law.  R.S.O. 1990, c. S.12, s. 28.

Determination of question

29. In any dispute over a decision or action of the Minister under subsection 28 (7), the Minister may, where the dispute involves the interpretation of a provision of this Act, or involves an issue solely of law in which no facts are in dispute, or involves the proper inference to be drawn from facts that are not in dispute, agree in writing with the disputing party as to the undisputed facts and thereafter apply to the Divisional Court to have the issue in dispute determined, and if the Minister does not make the application within six weeks of the date upon which the undisputed facts have been agreed upon in writing, the other party to the dispute may apply to the court to have the issue determined.  R.S.O. 1990, c. S.12, s. 29.

Offences

Offence

30. (1) Every person or corporation that makes or assists in making a statement in any document required by or for the purposes of this Act or the regulations that, at the time and in the light of the circumstances under which it was made, is false or misleading in respect of any material fact or that omits to state any material fact the omission of which makes the statement false or misleading is guilty of an offence and on conviction is liable to a fine of not less than 25 per cent and not more than 200 per cent of the amount of the grant or tax credit sought or received or to imprisonment for a term of not more than two years, or to both a fine and imprisonment.

Exception

(2) No person or corporation is guilty of an offence under subsection (1) if the person or corporation did not know that the statement was false or misleading and in the exercise of reasonable diligence could not have known that the statement was false or misleading.  R.S.O. 1990, c. S.12, s. 30.

Taxation

31. Sections 93 to 98 of the Corporations Tax Act shall be deemed to apply to,

(a) an application for a grant under section 20;

(b) a claim for a tax credit under section 21;

(c) any books, records, accounts or returns required to be maintained or made by a small business development corporation; and

(d) any books, records, accounts, returns or other information maintained by a small business that has been acquired by a small business development corporation as an eligible investment or that has ceased to be an eligible investment or a small business under this Act,

and any reference in the sections of the Corporations Tax Act to a corporation shall be applied as though the sections also included a reference to persons.  R.S.O. 1990, c. S.12, s. 31; 2004, c. 16, Sched. D, Table.

False statements

32. In addition to any other remedy available under this Act, where any person or corporation obtains a grant or tax credit under this Act or the regulations, on the basis of information that is false or misleading or an application that contains any false or misleading statement, the amount of such grant or tax credit together with interest thereon at the prescribed rate, shall be deemed to be a debt due to the Crown and may be recovered by an action in a court of competent jurisdiction.  R.S.O. 1990, c. S.12, s. 32.

Limitation

33. Proceedings to enforce any provision of this Act or the regulations may be instituted within six years after the time the subject-matter of the proceedings arose.  R.S.O. 1990, c. S.12, s. 33.

Regulations

34. (1) The Lieutenant Governor in Council may make regulations,

. . . . .

(b) requiring any person to make information returns respecting any class of information required in assessing compliance with this Act;

(c) prescribing the calculation of the amount of a grant or tax credit where equity shares are purchased by a shareholder as part of a distribution to the public;

(d) defining any word or expression used in this Act that has not already been expressly defined in this Act;

(e) prescribing the method of calculation of the consideration to be paid for each equity share under section 24 where a small business development corporation proposes to dissolve, or where its registration is revoked or surrendered, or any of its equity shares are purchased or otherwise acquired by the small business development corporation;

(f) prescribing any conditions that a corporation must meet prior to registration;

(g) prescribing the method of determining the amount of equity capital of a small business development corporation;

(h) prescribing authorized investments for the purposes of section 10;

(i) prescribing the amount of money available at any time under this Act or available by way of grant or tax credit;

(j) prescribing the method of calculation to be used in determining the percentage of wages and salaries paid in respect of operations in Ontario;

(k) prescribing any rate of interest that is to be prescribed and the method by which it is to be calculated;

(l) prescribing any matter required by this Act to be prescribed by the regulations.  R.S.O. 1990, c. S.12, s. 34 (1); 1997, c. 19, s. 24 (2).

(2) Repealed:  1997, c. 19, s. 24 (2).

Retroactivity

(3) A regulation is, if it so provides, effective with reference to a period before it was filed.  R.S.O. 1990, c. S.12, s. 34 (3).

Forms and fees

34.1 (1) The Minister may approve the use of forms for any purpose of this Act and the forms may provide for such information to be furnished as the Minister may require.

Fees

(2) The Minister may establish and charge fees for anything that the Minister or the Ministry is required or authorized to do under this Act or the regulations.  1997, c. 19, s. 24 (3).

Money

35. The money required for the purposes of this Act shall be paid out of the money appropriated therefor by the Legislature.  R.S.O. 1990, c. S.12, s. 35.

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