This consolidation is unofficial and is for reference only.  For the official version of the regulations, consult the original documents on file with the Registry of Regulations, or refer to the Royal Gazette Part II.
Regulations are amended frequently.  Please check the list of Regulations by Act to see if there are any recent amendments to these regulations filed with the Registry that are not yet included in this consolidation.
Although every effort has been made to ensure the accuracy of this electronic version, the Registry of Regulations assumes no responsibility for any discrepancies that may have resulted from reformatting.
This electronic version is copyright © 2015, Province of Nova Scotia, all rights reserved.  It is for your personal use and may not be copied for the purposes of resale in this or any other form.


Community Economic-Development Corporations Regulations

made under Sections 150 and 150B of the

Securities Act

R.S.N.S. 1989, c. 418

O.I.C. 2011-139 (April 12, 2011), N.S. Reg. 168/2011



Table of Contents

 

Citation

 

Interpretation

 

Scope of regulations

 

Restrictions

 

Certificate of registration

 

Letter of non-objection

 

Revocation of letter of non-objection

 

Promoter’s activity before issuance of letter of non-objection

 

Officers and directors

 

Minimum offering amount

 

Amounts subscribed held in trust

 

Amount not to exceed $3 000 000

 

Amounts to be used as indicated

 

Potential security holders

 

Promotional material

 

Amendments to offering document

 

Financial forecasts

 

Time limitation on offering

 

Report after closing

 

Corporation or association with restrictive constitution

 

Changes to investment strategy, objectives or restrictions

 

Special relationship with the CEDC

 

When CEDC no longer required to comply with Section 22

 

Bona fide attempt to comply

 

Report of a trade

 

General power to exempt

 

Form 1: Offering Document

Glossary

Table Of Contents

Cautions

The Offering

Risk Factors

Plan of Distribution

The Issuer

Business and Properties of an Issuer that is a Corporation

Specified Investments in Eligible Local Business Entities by an Issuer that is a Corporation

Business and Properties of an Issuer that is an Association

Capital Structure

Use of Proceeds

Financial Forecasts or Projections

Dividends, Distributions and Redemptions

Promoters of the Issuer

Officers of the Issuer

Directors of the Issuer

Key Personnel of the Issuer

Principal Security Holders

Management Relationships, Transactions and Remuneration

Litigation

Canadian Income Tax Considerations

Material Contracts

Financial Statements

Continuous Reporting Obligations

Restrictions on Resale of Securities

Rights of Action

Certificate

 

Form 2: Report of a Trade

 

Schedule A: List of Purchasers

 

 



Citation

1     These regulations may be cited as the Community Economic-Development Corporations Regulations.


Interpretation

2     (1)    In these regulations,

 

“Act” means the Securities Act;

 

“affiliated” has the same meaning as in the Equity Tax Credit Act;

 

“association” has the same meaning as in the Co-operative Associations Act;

 

“CEDC” means a community economic-development corporation;

 

“Commission” means the Nova Scotia Securities Commission;

 

“community economic-development corporation” means a corporation or association that meets the criteria prescribed by the Equity Tax Credit Regulations and is registered as a community economic-development corporation by the Minister of Finance and Treasury Board under Section 11 of the Equity Tax Credit Act;

[Note: The reference to the Minister of Finance has been updated in accordance with Order in Council 2013-348 under the Public Service Act, R.S.N.S. 1989, c. 376, effective October 22, 2013.]

 

“community economic-development plan” means a community economic-development plan proposed by a CEDC that contains the information prescribed by the Equity Tax Credit Regulations;

 

“corporation” means a corporation that is incorporated under the laws of the Province, another province of Canada or Canada and that has its head office located in the Province;

 

“Director” has the same meaning as in the Act;

 

“eligible business entity” has the same meaning as in the Equity Tax Credit Regulations;

 

Equity Tax Credit Regulations” means the Equity Tax Credit Regulations made under the Equity Tax Credit Act;

 

“offering” means an offering of shares by a CEDC under these regulations;

“offering document” means an offering document prepared in the form prescribed in Form 1;

 

“promotional material” means information relating to an offering and includes advertising and sales literature;

 

“Securities Rules” means the rules of the Commission made under the Act;

 

“security holder” means a person or company who owns shares of a CEDC; and

 

“specified issue” has the same meaning as in the Equity Tax Credit Act.

 

       (2)    Words not defined in these regulations have the meaning ascribed to them in the Act and the Securities Rules.


Scope of regulations

3     (1)    These regulations apply to a CEDC that engages in a distribution or a trade in a share of its own issue that is or is part of a specified issue in respect of which a tax-credit certificate has been issued.

 

       (2)    Section 58 of the Act does not apply to a distribution by a CEDC of shares of the CEDC made in accordance with these regulations.

 

       (3)    These regulations do not apply to a promoter of a CEDC who is not a promoter of the CEDC at the time its offering document is filed with the Director.

 

       (4)    Distributions in shares of a CEDC may be made only by registrants registered under the Act that are authorized to trade in the shares or by the individuals listed in the offering document.

 

       (5)    Each first trade and each subsequent trade of shares of a CEDC purchased under an offering is specified to be a distribution, unless

 

                (a)    the conditions in subsection 2.5(2) of National Instrument 45-102, Resale of Securities are satisfied; or

 

                (b)    the trade is made

 

                         (i)     to the CEDC in accordance with section 2.15 of National Instrument 45-106, Prospectus and Registration Exemptions,

 

                         (ii)    to a self-directed registered retirement savings plan of the security holder or the security holder’s spouse,

 

                         (iii)   to the spouse of the security holder,

 

                         (iv)   to a tax-free savings account of the security holder or the security holder’s spouse,

 

                         (v)    from a self-directed registered retirement savings plan of the security holder or the security holder’s spouse to the security holder,

 

                         (vi)   from a tax-free savings account of the security holder to the security holder or the security holder’s spouse,

 

                         (vii)  to a purchaser who owns shares of the CEDC and who is advised in writing by or on behalf of the vendor before entering into an agreement of purchase and sale that the purchaser will not accrue any advantage under the Equity Tax Credit Act as a result of the purchase, or

 

                         (viii) to a purchaser who purchases by way of a trade made in compliance with the Act and any applicable Securities Rules.


Restrictions

4     (1)    Concurrent with the distribution of shares through a specified issue, a CEDC may distribute shares under other prospectus exemptions, but only if full details of the concurrent distribution of shares or proposed distribution of shares are disclosed in the offering document.

 

       (2)    Subject to Section 8, a person or company must not distribute a security to which these regulations apply unless an offering document has been filed and a letter of non-objection has been issued by the Director.

 

       (3)    An offering document is deemed to be an offering memorandum as defined in the Act.


Certificate of registration

5     A CEDC must file its certificate of registration as a CEDC issued under Section 11 of the Equity Tax Credit Act with the Director immediately upon receipt.


Letter of non-objection

6     (1)    The Director must issue a letter of non-objection to an offering document unless, in the opinion of the Director, any of the following apply:

 

                (a)    it is not in the public interest to do so;

 

                (b)    the offering document does not meet all of the requirements of these regulations;

 

                (c)    the offering is not or will not be made in compliance with these regulations.

 

       (2)    On receipt of an offering document, the Director may do any of the following:

 

                (a)    inquire into any aspect of the offering and the offering document;

 

                (b)    request delivery of supplemental information before or after determining whether to issue a letter of non-objection;

 

                (c)    require the inclusion of supplemental information in the offering document before or after issuing a letter of non-objection.

 

       (3)    Before the Director issues a letter of non-objection to an offering document, there must be no trading or activity directly or indirectly in furtherance of trading in the shares of the CEDC, except as provided in subsection 8(1) respecting a promoter’s activity.


Revocation of letter of non-objection

7     (1)    If, after issuing a letter of non-objection, it appears to the Director that the continuation of the offering would not be in the public interest or that any requirement of these regulations has not been or is not being complied with, the Director may revoke the letter of non-objection.

 

       (2)    On receipt of notice of a revocation referred to in subsection (1), the CEDC and any other person or company trading on its behalf must immediately cease trading shares of the CEDC until the CEDC is notified by the Director that

 

                (a)    the Director has withdrawn the notice of revocation; or

 

                (b)    the Commission has by order determined that it would not be prejudicial to the public interest for the offering to continue.


Promoter’s activity before issuance of letter of non-objection

8     (1)    Before the Director issues a letter of non-objection to an offering document, a promoter may

 

                (a)    talk individually or in group situations with potential security holders to give them a general overview of the offering, including all of the following information:

 

                         (i)     identification of the CEDC,

 

                         (ii)    an indication of the amount of money needed to be raised,

 

                         (iii)   a general description of what use will be made of the money raised,

 

                         (iv)   an outline of the tax incentives; and

 

                (b)    gather the names of potential security holders who might be interested in the offering.

 

       (2)    A promoter must not use or distribute promotional material or expression of interest forms without the prior written non-objection of the Director.

 

       (3)    A promoter must not accept any binding commitments or binding expressions of interest, whether oral or written, or consideration in any form from potential security holders before the Director issues a letter of non-objection to the offering document.

 

       (4)    An expression of interest form must contain all of the following warnings to potential security holders:

 

                (a)    that they should read and consider the offering document they will receive with respect to the offering, if the offering does in fact proceed;

 

                (b)    that they should consult with a professional advisor before deciding to purchase shares under the offering;

 

                (c)    that the expression of interest is not in any way a binding commitment to purchase shares under the offering.


Officers and directors

9     (1)    The promoters, officers, directors and sales agents of a CEDC must be individuals who are suitable to act as promoters, officers, directors and sales agents and whose past conduct does not afford reasonable grounds to believe that the business of the CEDC will not be conducted with integrity and in the best interests of the CEDC.

 

       (2)    At least 2 directors of the CEDC must be independent.


Minimum offering amount

10   (1)    An offering document must state the minimum offering amount necessary to close the offering.

 

       (2)    A CEDC must also provide detailed reasons in its offering document explaining why the amount specified as the minimum offering amount is a reasonable amount when considered in the context of its community economic-development plan.

 

       (3)    An initial offering of a CEDC must obtain at least 25 purchasers.

 

       (4)    A subsequent offering of a CEDC that has closed an initial offering must obtain at least 3 purchasers.


Amounts subscribed held in trust

11   (1)    All amounts subscribed under an offering must be held in trust by a trustee that is dealing at arm’s length with the CEDC until after

 

                (a)    the CEDC meets its minimum offering amount and certifies to the trustee that all conditions of closing have been met; and

 

                (b)    the initial closing occurs.

 

       (2)    Any offering amounts received by a trustee under an offering after the initial closing must be held in trust until after

 

                (a)    the CEDC certifies to the trustee that all conditions of the next closing have been met; and

 

                (b)    the next closing occurs.

 

       (3)    The conditions in subsection (2) apply to each subsequent closing.

 

       (4)    All amounts subscribed must be paid by cheque or bank draft made payable only to the trustee (in trust).


Amount not to exceed $3 000 000

12   The amount subscribed under an offering must not exceed $3 000 000.


Amounts to be used as indicated

13   All amounts raised under an offering must be used as indicated in the offering document.


Potential security holders

14   (1)    A CEDC must provide each potential security holder with all of the following:

 

                (a)    all promotional material, the offering document and a subscription agreement;

 

                (b)    any additional materials required by the Director.

 

       (2)    A potential security holder is entitled to provide a CEDC with written notice evidencing the intention of the potential security holder not to be bound by their completed subscription agreement no later than midnight on the 2nd day, exclusive of Saturdays and holidays, after the day the CEDC receives the completed subscription agreement.

 

       (3)    A CEDC must maintain a record of the names and addresses of all persons and companies to whom an offering document and subscription agreement have been provided.


Promotional material

15   (1)    Any promotional material that is used in connection with an offering is incorporated by reference into the offering document.

 

       (2)    Any promotional material must include a disclaimer as required by the Director.

 

       (3)    All promotional material must be submitted to the Director and receive the written non-objection of the Director before its use.


Amendments to offering document

16   (1)    Except as required in this Section, no amendments may be made to an offering document after the Director issues a letter of non-objection to the offering document.

 

       (2)    After the Director issues a letter of non-objection to an offering document, the CEDC must file an amendment to the offering document with the Director if

 

                (a)    the CEDC has not yet met its minimum offering amount, the initial closing has not yet occurred, and any of the following apply:

 

                         (i)     there is a material change in the affairs of the CEDC,

 

                         (ii)    the terms or conditions of the offering are being altered,

 

                         (iii)   additional shares of the same class are to be distributed in addition to the securities previously described in the offering document; or

 

                (b)    the CEDC is still distributing its shares under the offering document after having met its minimum offering amount and having had the initial closing take place, and there is a material change in the affairs of the CEDC.

 

       (3)    A CEDC that files an amendment under clause (2)(b) must also comply with Part 7 of National Instrument 51-102, Continuous Disclosure Obligations.

 

       (4)    An amendment to an offering document must describe the change that resulted in the amendment and receive the written non-objection of the Director.

 

       (5)    An amendment to an offering document must be sent to all subscribers of the specified issue after the Director has issued a non-objection to the amendment.

 

       (6)    A subscriber whose subscription for the purchase of shares has not closed has 10 days from the date of receiving an amendment to an offering document to withdraw from their agreement to purchase shares.

 

       (7)    No later than 10 days after the date that a subscriber withdraws from their agreement to purchase shares under subsection (6), the trustee must return the subscriber’s funds to the subscriber.


Financial forecasts

17   Any use of financial forecasts or projections must be in accordance with Part 4B of National Instrument 51-102, Continuous Disclosure Obligations.


Time limitation on offering

18   (1)    An offering initially closes on the date specified in the offering document.

 

       (2)    Unless the Director grants an extension under subsection (3), the initial closing date specified in an offering document must be a date no later than 90 days after the date of the letter of non-objection issued by the Director for the offering document.

 

       (3)    The Director may grant an extension of the 90-day period on application by the CEDC.

 

       (4)    After the initial closing date, a CEDC may continue to offer shares under the offering document, but only if the initial closing has occurred and the Director has issued a letter of non-objection for the subsequent sales.


Report after closing

19   No later than 30 days after the date of each closing of an offering, the CEDC must file a report with the Director in the form prescribed by the Commission showing the names, addresses and telephone numbers of the security holders and the number and purchase price of the shares each has purchased, and certifying compliance with these regulations.


Corporation or association with restrictive constitution

20   (1)    If the proceeds of an offering are to be used by a CEDC with a constitution that restricts it to making specified investments in eligible local business entities in accordance with its community economic-development plan, the CEDC must

 

                (a)    outline its investment strategy, objectives and restrictions in the offering document; and

 

                (b)    meet the requirements of subsection (2) if it proposes to

 

                         (i)     invest more than 40% of the total proceeds of the current offering or more than 40% of the total proceeds of the current offering combined with all previous offerings in an eligible investment that was not disclosed in the offering document, and the eligible investment is in an eligible business entity or in eligible business entities that are affiliated, or

 

                         (ii)    use the proceeds from the offering for an eligible investment that was not disclosed in the offering document, and the proposed use of the proceeds is an additional investment to an investment that meets the conditions of subclause (i).

 

       (2)    Before entering into binding arrangements for an investment described in subclause (1)(b)(i) or (ii), a CEDC to which subsection (1) applies must

 

                (a)    provide security holders with an information circular that describes the investment to be made with the proceeds in sufficient detail to permit security holders to form a reasoned judgment concerning the investment; and

 

                (b)    have the approval of at least 50% plus 1 vote of the votes cast by security holders who vote at a meeting of security holders called to consider the making of the eligible investment, excluding the shares voted by officers, directors and promoters and parties related to the officers, directors and promoters.


Changes to investment strategy, objectives or restrictions

21   Changes to a CEDC’s investment strategy, objectives or restrictions as referred to in clause 20(1)(a) must be approved by at least 50% plus 1 vote of the votes cast by security holders who vote at a meeting of security holders called to consider an amendment to the strategy, objectives or restrictions, excluding the shares voted by officers, directors and promoters and parties related to the officers, directors and promoters.


Special relationship with the CEDC

22   (1)    Except as provided in subsections (2), (3) and (4), if a CEDC that is not a reporting issuer has met its minimum offering amount and has certified to the trustee that all conditions of closing have been met, and if the initial closing has occurred, the CEDC and every person or company who would be an insider of the CEDC if the CEDC were a reporting issuer, and every person or company who would be in a special relationship with the CEDC within the meaning of subsection 82(5) of the Act if the CEDC were a reporting issuer, is subject to Sections 81 and 82 of the Act and the related provisions of the Securities Rules to the same extent as if the CEDC were a reporting issuer and the person or company were an insider of the CEDC or in a special relationship with the CEDC.

 

       (2)    A CEDC’s annual financial statements need not be accompanied by a report of an auditor if all of the following apply:

 

                (a)    the security holders are not required by law to appoint an auditor;

 

                (b)    a general review has been carried out by an independent accountant in compliance with the general review standards as set out in the Canadian Institute of Chartered Accountants Handbook;

 

                (c)    the financial statements are accompanied by a review engagement report as set out in the Canadian Institute of Chartered Accountants Handbook.

 

       (3)    For the purposes of these regulations, effective for all fiscal years beginning on and after January 1, 2011, the financial statements for a CEDC may be prepared in accordance with Canadian Generally Accepted Accounting Principles using International Financial Reporting Standards for Publicly Accountable Enterprises or Canadian Generally Accepted Accounting Principles for Private Enterprises as set out in the Canadian Institute of Chartered Accountants Handbook.

 

       (4)    If a CEDC files financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles using International Financial Reporting Standards for Publicly Accountable Enterprises, it must continue to file financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles using International Financial Reporting Standards for Publicly Accountable Enterprises.


When CEDC no longer required to comply with Section 22

23   A CEDC is no longer required to comply with Section 22 if

 

                (a)    the CEDC files with the Director a notification from the Minister of Finance and Treasury Board that the CEDC has surrendered its registration; or

[Note: The reference to the Minister of Finance has been updated in accordance with Order in Council 2013-348 under the Public Service Act, R.S.N.S. 1989, c. 376, effective October 22, 2013.]


                (b)    the CEDC files with the Director a statement from the officers of the CEDC certifying all of the following:

 

                         (i)     that the CEDC has fewer than 5 shareholders,

 

                         (ii)    that the hold period required by the Equity Tax Credit Act has expired on all shares,

 

                         (iii)   that financial statements on which a general review has been carried out by an independent accountant in compliance with the general review standards as set out in the Canadian Institute of Chartered Accountants Handbook and that are dated within 90 days of the filing have been filed with the Director,

 

                         (iv)   that no shares are held in self-directed registered retirement savings plans or tax-free savings accounts,

 

                         (v)    that the CEDC has complied with all the requirements of these regulations,

 

                         (vi)   that a certified vote has been obtained indicating that 66.6% or more of shares eligible to be voted have been voted in favour of not being required to comply with Section 22.


Bona fide attempt to comply

24   If a trade is made by a CEDC in the bona fide and reasonable belief that there has been full compliance with these regulations, the failure of 1 or more security holders to purchase as principal, to receive an offering document or amendments to an offering document in a timely manner, or to receive any other materials required by the Director does not affect the application of the remaining provisions of these regulations, but only if

 

                (a)    the CEDC exercised due diligence to ensure that the failure would not occur; and

 

                (b)    the CEDC delivers the offering document or amendments to the offering document or other material required by the Director to the security holders on request.


Report of a trade

25   No later than 30 days after the date a trade is made under these regulations, other than a distribution made by a CEDC, the vendor must file a Form 2: Report of a Trade with the Director.


General power to exempt

26   The Director may grant an exemption from any provision in these regulations subject to any conditions or restrictions that the Director imposes in the exemption.

 


Form 1: Offering Document

(under the Community Economic-Development Corporations Regulations)


(This document is to be used only by Community Economic-Development Corporations, as defined in this document.)

(Instructions for preparing the offering document are italicized and in brackets. Please omit the bracketed instructions when preparing the offering document.)


Subscribers may cancel their purchase of Shares by notifying the Issuer in writing no later than midnight on the 2nd day, exclusive of Saturdays, Sundays and holidays, after the day the Issuer receives the completed subscription agreement.


Glossary

In this offering document:

 

1.    “Act” means the Securities Act;

 

2.    “Association” means an association as defined in the Co-operative Associations Act;

 

3.    “CEDC” means a Community Economic-Development Corporation;

 

4.    “CEDC Regulations” means the Community Economic-Development Corporation Regulations made under the Act;

 

5.    “Community Economic-Development Corporation” means a Corporation or Association that meets the criteria prescribed by the regulations made under the Equity Tax Credit Act and is registered as a Community Economic-Development Corporation by the Minister of Finance and Treasury Board under Section 11 of the Equity Tax Credit Act;

[Note: The reference to the Minister of Finance has been updated in accordance with Order in Council 2013-348 under the Public Service Act, R.S.N.S. 1989, c. 376, effective October 22, 2013.]


6.    “Community Economic-Development Plan” means the community economic-development plan proposed by the Issuer that contains the information prescribed by the regulations made under the Equity Tax Credit Act;

 

7.    “Corporation” means a corporation that is incorporated under the laws of the Province of Nova Scotia, another province of Canada or Canada and that has its head office located in the Province of Nova Scotia;

 

8.    “Finders” means persons who, for compensation or without compensation, act as intermediaries in making introductions in furtherance of this Offering;

 

9.    “Issuer” means (insert legal name of the CEDC), the CEDC that is making this Offering;

 

10.  “Investee Corporation” means a corporation in which the Issuer proposes to invest or has invested 20% or more of the net proceeds of this Offering or net proceeds of previous offerings and of which all or substantially all of the fair market value of the property is attributable to property used in an active business;

 

11.  “Offering” means this offering of Shares of the Issuer;

 

12.  “Promoter” has the same meaning as in the Act, except that in accordance with subsection 3(3) of the CEDC Regulations no individual is considered as a promoter of the Issuer unless that individual is a promoter at the time this offering document is filed with the Director of Securities;

 

13.  “Securities Rules” means the rules of the Nova Scotia Securities Commission made under the Act;

 

14.  “Security holder” means a person or company who owns shares of the Issuer;

 

15.  “Selling Agent” means a person listed in item 11(a) of this offering document;

 

16.  “Shares” means (name the shares being offered for sale by the Issuer as set forth in the constitutional documents of the Issuer) of the Issuer that qualify as a specified issue as defined in subclause 2(k)(iii) of the Equity Tax Credit Act.


Table Of Contents

 

Cautions ...................................................................................................................... (page #)
The Offering ................................................................................................................. (page #)
Risk Factors ................................................................................................................. (page #)
Plan of Distribution ........................................................................................................ (page #)
The Issuer ..................................................................................................................... (page #)
Business and Properties of an Issuer that is a Corporation .............................................. (page #)
Specified Investments in Eligible Local Business Entities by an Issuer
that is a Corporation ......................................................................................................
(page #)
Business and Properties of an Issuer that is an Association ............................................. (page #)
Capital Structure ........................................................................................................... (page #)
Use of Proceeds ........................................................................................................... (page #)
Financial Forecasts or Projections ................................................................................. (page #)
Dividends, Distributions and Redemptions ..................................................................... (page #)
Promoter of the Issuer ................................................................................................... (page #)
Officers of the Issuer ..................................................................................................... (page #)
Directors of the Issuer ................................................................................................... (page #)
Key Personnel of the Issuer ........................................................................................... (page #)
Principal Security Holders ............................................................................................. (page #)
Management Relationships, Transactions and Remuneration ........................................... (page #)
Litigation ....................................................................................................................... (page #)
Canadian Income Tax Considerations ............................................................................ (page #)
Material Contracts ........................................................................................................ (page #)
Financial Statements ...................................................................................................... (page #)
Continuous Reporting Obligations ................................................................................. (page #)
Restrictions on Resale of Securities ................................................................................ (page #)
Rights of Action ............................................................................................................ (page #)
Certificate..................................................................................................................... (page #)


Cautions


The Nova Scotia Securities Commission has not assessed:

      the reasonableness or merit of the Issuer or the Offering;

      whether the Issuer has sufficient financing and managerial expertise to accomplish its stated objectives;

      whether management of the Issuer has the reputation and commitment to conduct the Issuer’s business with integrity and in the best interest of the Security holders;

      whether the Promoters and management of the Issuer are receiving unconscionable benefits at the expense of the Security holders; or

      whether any financial forecast or projection contained in this offering document has a

reasonable basis.

Investment in small business involves a high degree of risk, and investors should not invest any funds in this Offering unless they can afford to lose a substantial portion of their investment. Potential investors should read all of this offering document, particularly the risk factors on page (insert appropriate page number).


Potential investors should review the information concerning the background of the Issuer’s officers, directors and other key personnel and consider whether or not these persons have adequate background and experience to develop and operate the Issuer and to make it successful. In this respect, the experience and ability to manage are often considered among the most significant factors in the success of a business.


After reviewing the “Use of Proceeds” on page (insert appropriate page number) potential investors should consider whether the amounts available for future development of the Issuer’s business and operations will be adequate.


A Security holder may have rights of rescission or an action for damages in circumstances that are described in this offering document beginning on page (insert appropriate page number).


There is no organized market through which the Shares may be sold. It may be difficult or even impossible for the investor to sell them.


Potential investors should also consult their professional advisors before investing.


This offering document, together with the documents incorporated in it by reference and forming part of it, and the attachments to it, contain all of the representations by the Issuer concerning this Offering, and a person must not make different or broader statements than those contained in it. Investors are cautioned not to rely on any information not expressly set forth in or attached to this offering document.


All promotional material is incorporated by reference into this offering document in accordance with Section 15 of the CEDC Regulations.


This offering document, together with financial statements and other attachments, consists of a total of ______ pages.


The Offering

 

1.    (a)    The Shares being offered are: (Describe the Shares being offered including the price of the Shares and the material attributes of the Shares.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (b)    The minimum number of shares to be purchased by each subscriber under this Offering is:

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (c)    The Issuer is / is not concurrently distributing or contemplating another distribution of securities within the next 12 months. (If so, please provide full details.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

2.    The offering price was established by (indicate 1 of the following and delete the others)

                       [by] negotiation with the investor

                       arbitrarily by the Issuer

                       otherwise (explain)

3.    Maximum number of Shares offered:      ____________________________

4.    Total proceeds if maximum sold:             ___________________________________

5.    Minimum number of Shares offered:       ___________________________________

6.    Total proceeds if minimum sold:             ___________________________________

7.    Reasons for the selection of the minimum number of Shares offered:

_______________________________________________________________________

       _______________________________________________________________________

       _______________________________________________________________________

 

(Issuers are required to explain why the total proceeds raised if the minimum number of securities offered is sold is a reasonable amount, taking into consideration the business of the Issuer as described in either item 21 or 22 or item 23 or 24 and the use that will be made of the proceeds of the offering as described in item 27.)

 

8.    Minimum number of investors required: ___________________________________

 

(Issuers are required to indicate how the minimum number of investors required meets the concept of a “community based” project. For a first offering, an Issuer must obtain at least 25 investors; subsequent offerings require at least 3 investors.)


9.    Total estimated costs of the Offering:      ___________________________________


Risk Factors

 

10.  The following, listed in order of importance, are the factors that the Issuer considers to be the most substantial risks to an investor in this Offering in view of all known facts and circumstances (i.e., those factors that constitute the greatest threat that the investment will be lost in whole or in part, or not provide an adequate return).

 

(List risk factors in order of importance, taking into consideration the factors noted below.)

 

       (a)    __________________________________________________________________

__________________________________________________________________

__________________________________________________________________

 

(b)__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

 

       (c)    __________________________________________________________________

__________________________________________________________________

__________________________________________________________________

 

       (d)    __________________________________________________________________

__________________________________________________________________

__________________________________________________________________

 

       (e)    __________________________________________________________________

__________________________________________________________________

__________________________________________________________________

 

In addition to the above risk factors, potential investors should consider the following risk factors before they decide to purchase the Shares being offered:

 

       (f)     The Shares are speculative in nature. An investment is appropriate only for investors who are prepared to have their money invested for a long period of time, and who have the capacity to absorb a loss of some or all of their investment.

 

       (g)    There is no organized market through which the Shares may be sold. Therefore, investors may find it difficult or even impossible to sell their Shares.

 

       (h)    There are restrictions on the resale of the Shares. See item 57 for details.

 

       (i)     The Issuer may not achieve a level of profitability to permit dividends to be paid. Investors should not count on any return from these Shares.

 

       (j)     Investors who deposit the Shares in a self-directed RRSP should not depend on selling the Shares or income from the Shares to fund their retirement.

 

       (k)    Tax laws frequently change.


Plan of Distribution

 

11.  (a)    The following people are the Selling Agents authorized to sell Shares under the Offering:


Name

Address

Business Phone #

Fax #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       (b)    The following people are the Finders under the Offering:


Name

Address

Business Phone #

Fax #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.  (a)    The Issuer is / is not providing compensation to Selling Agents or Finders. (If so, describe the compensation, including any cash, securities, contracts or other consideration of any kind, direct or indirect.)

 

       (b)    The Issuer will / will not indemnify the Selling Agents or Finders against liabilities, if any, under the securities laws.

 

       (c)    A Selling Agent cannot concurrently act in that capacity in more than 2 offerings in distribution under the CEDC Regulations.

 

13.  Description of material relationship between any of the Selling Agents or Finders and the Issuer or its management: (If none, so indicate.)

_______________________________________________________________________

       _______________________________________________________________________

 

Note: After reviewing the amount of compensation to the Selling Agents or Finders for selling the Shares, and the nature of the relationship between the Selling Agents or Finders and the Issuer, a potential investor should carefully consider the following points when evaluating any recommendation by the Selling Agents or Finders to buy the Shares:

 

       (a)    amount of compensation received by the Selling Agents or Finders to sell the shares;

 

       (b)    the nature of the relationship between the Selling Agents or Finders and the Issuer; and

 

       (c)    unlike most securities offerings, the Selling Agents and Finders are not required to be registered under the Act to trade securities and therefore, when investors purchase the Shares through unregistered Selling Agents or Finders, they should be aware that:

 

                (i)     they will not have the protections afforded by certain requirements and standards imposed on “registrants” under the Act, including proficiency standards, reporting requirements, “know your client” requirements and “suitability” requirements; and

 

                (ii)    unregistered Selling Agents and Finders are generally prohibited by the Act from giving investment advice to potential investors unless permitted to do so by an exemption expressly set out in the Act or granted by the Nova Scotia Securities Commission under the Act.

 

Please refer to items 45, 51(b) and 54 for additional information on the relationship between parties.

 

14.  Procedure by which investors subscribe for Shares under the Offering:

_______________________________________________________________________

       _______________________________________________________________________

       _______________________________________________________________________

 

Note: Subscribers may cancel their purchase of Shares by notifying the Issuer in writing no later than midnight on the 2nd day, exclusive of Saturdays, Sundays and holidays, after the day the Issuer receives the completed subscription agreement.

 

15.  The subscription funds will be held in trust by (state name of the lawyer or financial institution that will hold money in trust) and will become available to the Issuer only after the conditions of closing described below have been met and the Offering has closed.

 

16.  The following are conditions of the initial closing of this Offering:

 

       (a)    the Issuer has received the minimum offering amount of $___________ in cheques or bank drafts that are in the possession of the Trustee;

 

       (b)    all material contracts have been signed, and all material consents of third parties have been obtained;

 

       (c)    all necessary and required certificates under the Equity Tax Credit Act and its regulations and other applicable laws have been obtained and are current, including:

 

                (i)     a non-objection letter issued by the Director of Securities that has not been subsequently revoked; and

 

                (ii)    an Equity Tax Certificate that has not lapsed or been revoked by the Minister of Finance and Treasury Board;

[Note: The reference to the Minister of Finance has been updated in accordance with Order in Council 2013-348 under the Public Service Act, R.S.N.S. 1989, c. 376, effective October 22, 2013.]


       (d)    at least ____ shareholders have subscribed (in accordance with item 8);

 

       (e)    all subscription funds are in the possession of the Trustee.

 

17.  The minimum offering amount and all other conditions of the initial closing must be achieved on or before (insert date). (This date must be no more than 90 days after the date of issuance of a letter of non-objection for the offering document by the Director of Securities under the CEDC Regulations, unless the Director has granted an extension.)

 

18.  If the minimum offering amount and all other conditions of the initial closing are not achieved on or before the date specified in item 17, and no extension has been granted by the Director, the Offering will be withdrawn and all of the proceeds of subscription, without interest, will be returned to the subscribers no later than 30 days after the date that the Offering was to close.

 

19.  The following are conditions of each subsequent closing of this Offering:

 

       (a)    there has been no material change in material contracts referred to in item 16(b);

 

       (b)    all necessary and required certificates under the Equity Tax Credit Act and its regulations and other applicable laws have been obtained and are current, including

 

                (i)     a non-objection letter issued by the Director of Securities for the initial and any subsequent sales that has not been revoked, and

 

                (ii)    an Equity Tax Certificate that has not lapsed or been revoked by the Minister of Finance and Treasury Board;

[Note: The reference to the Minister of Finance has been updated in accordance with Order in Council 2013-348 under the Public Service Act, R.S.N.S. 1989, c. 376, effective October 22, 2013.]


       (c)    all subscription funds are in cheques or bank drafts and in the possession of the Trustee.


The Issuer

 

20.  Issuer’s exact name as it appears in its incorporating document: _______________________________________________________________________

       _______________________________________________________________________

       _______________________________________________________________________


       Name of CEDC: _________________________________________________________


       Jurisdiction and date of incorporation:     ____________________________________


       Address of registered office:                    ____________________________________


       Address of principal business address:     ____________________________________


       Issuer’s telephone number:                      ____________________________________


       Issuer’s fax number:                                ____________________________________


       Contact person at Issuer with respect to the Offering: ______________________________


       Telephone number and e-mail of contact person: _________________________________


       Fiscal year end: (month/day)                              _________________________________


Business and Properties of an Issuer that is a Corporation

 

(If the Issuer is a Corporation and now operates or proposes to operate an active business or to invest all or substantially all of the proceeds of the offering in shares of a corporation of which all or substantially all of the fair market value is attributable to property used in an active business (the “Investee Corporation”), please complete item 21.)

 

(If the Issuer is a Corporation and has a constitution that restricts it to making specified investments in eligible local business entities in accordance with its Community Economic-Development Plan, please go to item 22.)

 

Note: If the Issuer proposes to invest or has invested 20% or more of the net proceeds of the total offerings to date or of the contemplated offering in an Investee Corporation, the most recent financial statements of the Investee Corporation must be attached and form part of this document.


21.  With respect to the business of the Issuer and its properties,

 

       (a)    Description of the business(es) the Issuer or Investee Corporation now operates and proposes to operate:

(Describe in detail, including the products that are or will be produced or services that are or will be rendered.)

                ___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (b)    Description of how these products or services are to be produced or rendered and how and when the Issuer intends to carry out its activities:

\

(If the Issuer or Investee Corporation plans to offer a new product(s), also state the present stage of development, including whether a working prototype(s) is in existence. Indicate if completion of development of the product will require a material amount of the resources of the Issuer, and the estimated amount. Include descriptions of any major existing supply contracts.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (c)    Industry in which the Issuer or Investee Corporation is selling or expects to sell its products or services:

(Describe the industry in which the Issuer or Investee Corporation is selling or expects to sell its products or services and, if applicable, any recognized trends within the industry. Describe the part of the industry and the geographic area in which the business competes or will compete. Indicate whether competition is or is expected to be by price or service or on other basis.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (d)    Nature and extent of federal, provincial and municipal regulations to which the Issuer’s or Investee Corporation’s business, products or properties are subject:

(Indicate the nature and extent of each regulation and its effects or potential effects upon the Issuer. If none, so indicate.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (e)    Number and types of employees of the Issuer or Investee Corporation, and number and type of employees it anticipates it will have within the next 12 months:

                _______________________________________________________________________________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (f)     Description of principal properties owned or leased by the Issuer or the Investee Corporation, and properties the Issuer or Investee Corporation intends to acquire in the next 12 months:

(Describe generally the principal properties (such as real estate, plant and equipment, patents, etc.) that the Issuer or Investee Corporation owns, indicating also what properties it leases and a summary of the terms of those leases, including the amounts of payments, expiration dates and the terms of any renewal options. Indicate what properties the Issuer or Investee Corporation intends to acquire in the next 12 months, the costs of those acquisitions and the sources of financing it expects to use in obtaining those properties, whether by purchase, lease or otherwise.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (g)    Name, business purpose and ownership details for each subsidiary of the Issuer or Investee Corporation: (If none, so indicate.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (h)    Summary of material events (i.e., those that are fundamental to business and day-to-day operations) in the development of the Issuer or Investee Corporation during the last 5 years or whatever shorter period the Issuer has existed:

 

(Include both positive and negative facts. Also include details on profits and losses, including the causes of any losses. Include as well any material acquisitions or arrangements.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________


Specified Investments in Eligible Local Business Entities by an Issuer that is a Corporation

 

(Item 22 must be completed by an Issuer that is a Corporation with a constitution that restricts it to making specified investments in eligible local business entities in accordance with its Community Economic-Development Plan.)

 

Note: If the Issuer proposes to invest or has invested 20% or more of the net proceeds of the total offerings to date or of the contemplated offering in an Investee Corporation, the most recent financial statements of the Investee Corporation must be attached and form part of this document.

 

22.  (a)    Restrictions on investments as described in the Issuer’s constitution:

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (b)    The Issuer’s investment strategy and objectives as set forth in the Issuer’s Community Economic-Development Plan:

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (c)    Intended specified investments in eligible local business entities that the Issuer plans to make with the proceeds of the Offering, and how they fall within the Issuer’s Community Economic-Development Plan:

(If no such specified investments are planned at the time of the Offering or if further specific investments are contemplated, please indicate that fact.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (d)    The Issuer has / does not have an exit strategy for the investments. (If so, please describe.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

Potential investors should note that if specified investments in eligible local business entities are not described in this offering document, the Issuer must make those investments in compliance with Section 20 of the CEDC Regulations.


Business and Properties of an Issuer that is an Association

 

(If the Issuer is an Association and now operates or proposes to carry on business or operate as a marketing, producer or employee co-operative, as those activities are defined in the regulations made under the Equity Tax Credit Act, please complete item 23.)

 

(If the Issuer is an Association that has a constitution that restricts it to investing in eligible investments in accordance with the regulations made under the Equity Tax Credit Act, please go to item 24.)

 

NOTE: If the Issuer proposes to invest or has invested 20% or more of the net proceeds of the total offerings to date or of the contemplated offering in an Investee Corporation, the most recent financial statements of the Investee Corporation must be attached and form part of this document.

 

23.  With respect to the business of the Issuer and its properties:

 

       (a)    Description of the business(es) the Issuer now operates and proposes to operate:

(Describe in detail, including the products that are or will be produced or services that are or will be rendered.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (b)    Description of how these products or services are to be produced or rendered and how and when the Issuer intends to carry out its activities:

(If the Issuer plans to offer a new product(s), also state the present stage of development, including whether a working prototype(s) is in existence. Indicate if completion of development of the product will require a material amount of the resources of the Issuer, and the estimated amount. Include descriptions of any major existing supply contracts.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (c)    Industry in which the Issuer is selling or expects to sell its products or services:

(Describe the industry in which the Issuer is selling or expects to sell its products or services and, if applicable, any recognized trends within the industry. Describe the part of the industry and the geographic area in which the business competes or will compete. Indicate whether competition is or is expected to be by price or service or on other basis.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (d)    Nature and extent of federal, provincial and municipal regulations to which the Issuer’s business, products or properties are subject:

(Indicate the nature and extent of each regulation and its effects or potential effects upon the Issuer. If none, so indicate.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________


(Item 24 must be completed by an Issuer that is an Association that has a constitution that restricts it to investing in eligible investments in accordance with the regulations made under the Equity Tax Credit Act.)


Note: If the Issuer proposes to invest or has invested 20% or more of the net proceeds of the total offerings to date or of the contemplated offering in an Investee Corporation, the most recent financial statements of the Investee Corporation must be attached and form part of this document.

 

24.  (a)    Restrictions on investments as described in the Issuer’s constitution:

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (b)    Issuer’s investment strategy and objectives as set forth in its Community Economic-Development Plan:

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (c)    The Issuer intends to make the following specified eligible investments with the proceeds of the offering:

(Describe any intended specified eligible investments that the Issuer plans to make with the proceeds of the offering. If no such specific eligible investments are planned at the time of the Offering or if further specific eligible investments are contemplated, please indicate that fact.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

       (d)    The Issuer has / does not have an exit strategy for the investments. (If so, please describe.)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

 

Potential investors should note that if specific eligible investments are not described in this offering document, the Issuer must comply with Section 20 of the CEDC Regulations.


Capital Structure


25.  The following table describes the authorized capital of the Issuer:


Name of Security

Description of Attributes

 

 

 

 

 

(In the table, please name and describe the classes of securities of the Issuer, if any, exactly as set out in the constitutional documents of the Issuer. If these details are lengthy, then refer to the constitutional documents by reference and attach them to the offering document. The reference should state: “The constitutional documents attached to this offering document describe the authorized capital of the Issuer”.)

 

26.  The following table describes the capital structure of the Issuer and also what the capital structure will be on the conclusion of the Offering:


Column 1

Column 2

Column 3

Column 4

Column 5

Name of Security

Number Authorized

Total Dollar Value

and Number Outstanding on Latest Financial Statements

Transactions in Interim Period to Date of Offering Document

Total Dollar Value and Number Outstanding at Initial Closing

@ Minimum

@ Maximum

(Loans/ other indebtedness)

 

 

 

 

(Preferred shares)

 

 

 

 

(Common shares)

 

 

 

 

 

(In columns 3, 4 and 5, state the dollar amount first and the number of securities in brackets after.)


Use of Proceeds

 

27.  The funds raised in the Offering will be used as indicated in the following table:


 

If Minimum Sold

%

If Maximum Sold

%

Total Proceeds

 

100

 

100

Less: Offering expenses

 

 

 

 

Commissions

 

 

 

 

Promoter fees

 

 

 

 

Legal & accounting

 

 

 

 

Copying & other expenses

 

 

 

 

Total cost of offering

 

 

 

 

Net Proceeds from Offering

 

 

 

 

Use of Net Proceeds

 

 

 

 

Investments

 

 

 

 

Administration

 

 

 

 

Total Use of Net Proceeds

 

 

 

 

 

(The information concerning “Use of Net Proceeds” must be meaningful and in reasonable detail. Normally, it is not sufficient to say only that “the proceeds of this offering will be used for general corporate or association purposes.” Describe any projects in reasonable detail and their location.)

 

28.  The proceeds set forth under the column “If Minimum Sold” will be used in the following order of priority: (describe order of priority)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

29.  Amounts and sources of material amounts of funds from other sources than the Offering that are to be used in conjunction with the proceeds from the Offering:

(State the amounts and sources of the other funds, and whether those funds are firm or contingent. If contingent, explain the contingent event(s). If none, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

30.  Financial problems the Issuer is having or anticipates having within the next 12 months:

(Indicate whether the Issuer is having or anticipates having within the next 12 months any cash flow or liquidity problems and whether the Issuer is in default or in breach of any note, loan, lease or other indebtedness or financing arrangement requiring the Issuer to make payments. Indicate if a significant amount of the Issuer’s trade payables have not been paid within the stated trade term. State whether the Issuer is subject to any unsatisfied judgments, liens or settlement obligations and the amount thereof. Indicate the Issuer’s plans to resolve any such problems.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

31.  The proceeds from the Offering will / will not satisfy the Issuer’s cash requirements for the next 12 months, and it will / will not be necessary to raise additional funds. (If applicable, state the source of additional funds, if known.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

Financial Forecasts or Projections

 

32.  Description of assumptions used in making the future-oriented financial information found on page (insert page #):

(Describe the assumptions here and indicate the page on which the future-oriented financial information can be found. If there is no future-oriented financial information, please state that there is none.)

       ____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

(If future-oriented financial information, such as forecasts or projections, will be provided to potential investors, that information must be attached to the offering document and referred to in this item. The forecast or projection must include all of the assumptions used to calculate the figures shown and be prepared in accordance with Section 17 of the CEDC Regulations.)

 

Dividends, Distributions and Redemptions

 

33.  Particulars of the Issuer’s dividend policy: (If none, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

34.  Details of dividends and other distributions paid by the Issuer to its security holders during the last 5 years:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

Promoters of the Issuer

 

35.  The Promoters of the Issuer are:

 

       Name:                                  _____________________________________________________

 

       Business street address:       _____________________________________________________

 

       Business telephone number:(_____)_______________________________________________

 

       Business fax number:          (_____)_______________________________________________

 

Names of employers, titles and dates of positions held during the last 5 years with an indication of job responsibilities:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Education (degrees, schools and dates):

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Nature of projects during the last 5 years if not described above:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       (Provide this information for each Promoter of the Issuer.)

 

Officers of the Issuer

 

36.  The officers of the Issuer are:

 

       Name:                                  _____________________________________________________

 

       Business street address:       _____________________________________________________

 

       Business telephone number:(_____)_______________________________________________

 

       Business fax number:          (_____)_______________________________________________

 

Names of employers, titles and dates of positions held during the last 5 years with an indication of job responsibilities:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Education (degrees, schools and dates):

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Nature of projects during the last 5 years if not described above:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Also a director of the Issuer?                   ____ Yes       ____ No

 

       Amount of time to be spent on Issuer’s matters, if less than full time:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       (Provide this information for each officer of the Issuer.)

 

Directors of the Issuer

 

37.  (a)    There are (#) directors of the Issuer, 6 of which come from the community, as required by the regulations made under the Equity Tax Credit Act.

 

       (b)    At least 2 directors of the Issuer must be independent. The following are the names of the independent directors and a description of how they are independent:

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

 

38.  Information concerning each director of the Issuer, other than those already listed under the heading “Officers of the Issuer”:

(If there are no directors in addition to those listed under the heading “Officers of the Issuer”, state: “There are no directors of the Issuer other than those listed under the heading “Officers of the Issuer””.)

 

       Name:                                  ____________________________________________________

 

       Business street address:       ____________________________________________________

 

       Business telephone number:(_____)______________________________________________

 

       Business fax number:          (_____)______________________________________________

 

Names of employers, titles and dates of positions held during the last 5 years with an indication of job responsibilities:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Education (degrees, schools and dates):

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       Nature of projects during the last 5 years if not described above:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       (Provide this information for each director of the Issuer who is not an officer.)

 

Key Personnel of the Issuer

 

39.  The key personnel of the Issuer (i.e., those essential to the operations of the Issuer) who are not already named as officers, directors or promoters are:

 

       Name:                                  ____________________________________________________

       Business street address:       ____________________________________________________

       Business telephone number:(_____)______________________________________________

       Business fax number:          (_____)______________________________________________

 

Names of employers, titles and dates of positions held during the last 5 years with an indication of job responsibilities:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

       (Provide this information for each key person.)

 

40.  Description of arrangements to ensure that each key person will remain with the Issuer and on termination of their relationship with the Issuer will not compete with the Issuer: (If none, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

41.  Details of any experience that the officers, directors or other key personnel of the Issuer have in working for or managing a company (including a separate subsidiary or division of a larger enterprise) in the same business as the Issuer: (Explain, including relevant dates. If none, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

42.  (This item applies only to an Issuer that has never conducted business or is otherwise in the development stage.)

Details of any experience that the officers, directors or other key personnel of the Issuer have in managing any other business in the start-up or development stage: (Describe the circumstances, including relevant dates.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

43.  Details of the engagement by the Issuer of any key personnel who are not employees but are consultants or other independent contractors: (If none of the key personnel are consultants or other independent contractors, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

44.  Details of any petition under the Bankruptcy and Insolvency Act (Canada) that has been filed within the last 5 years against any officer, director, key personnel or Promoter, or any appointment by a court within the last 5 years of a receiver or receiver-manager for the business or estate of any of those persons, or any partnership in which any of those persons was general partner, or any corporation or business association of which any of those persons was an executive officer:

(Set out the name of the persons, and the nature and date of the actions. If none, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

Principal Security Holders

 

45.  The principal security holders of the Issuer (those who beneficially own directly or indirectly 10% or more of any securities of the Issuer presently outstanding) are as follows:

(Start with the largest common shareholder. If a principal security holder is not an individual, please disclose the ownership of the principal security holder by a footnote to the table. If the Issuer has no principal security holder state: “There are no security holders of the Issuer who own directly or indirectly more than 10% of any securities of the Issuer” and do not complete the remainder of this item.)

 

Name

 

Business street address

 

Business telephone number

 

Date(s) of purchase

 

Type of share

 

Average price per share

 

Number of shares now held

 

Percent of total

 

 

       (Provide this information for each principal security holder.)

 

46.  Number of shares beneficially owned by officers and directors as a group:

 

Before Offering: shares ( % of total outstanding)

 

Note: The officers and directors of the Issuer may subscribe for shares during the offering, in which case the number of shares beneficially owned by officers and directors as a group after the offering will increase.

 

Management Relationships, Transactions and Remuneration

 

47.  Descriptions of relationships by blood or marriage of the officers, directors, key personnel, Promoters and principal security holders: (If there are no relationships by blood or marriage, so indicate.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

48.  Explanation of any business dealings that took place within the last 2 years or that the Issuer is contemplating between the Issuer and any of its officers, directors, key personnel, Promoters or principal security holders, or any of their relatives or any entity controlled directly or indirectly by any of those persons, including any loans made or received by the Issuer:

(This includes sales or leases of goods, property or services to or from the Issuer, employment contracts, or share, option or other purchase contracts, etc. State the principal terms of any significant loans, agreements, leases, financing or other arrangements. If there are none, so indicate. )

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

49.  Details of any payments to officers, directors, key personnel and Promoters of the Issuer, including salary, bonuses, director’s fees, honoraria and reimbursement of expenses:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

50.  Description of any employment agreements, either existing or contemplated, with officers, directors, key personnel or Promoters:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

51.  (a)    The Issuer has / does not have a Conflict of Interest Policy.

       (b)    Details of all business or personal interests that the officers, directors, key personnel, Promoters or principal security holders of the Issuer, or any related parties, such as a relative of any of those persons or any entity controlled directly or indirectly by any of those persons, may have that could conflict with the interests of the Issuer: (Give details here even if they are described in other items in this offering document.)

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

 

Litigation

 

52.  Past, current, pending or threatened litigation or administrative action that has had or may have a material effect upon the Issuer’s business, financial condition or operations:

(State the name of the court or tribunal, the names of the principal parties, the date any proceedings were started, the nature and current status of the proceedings and the amounts involved. Include any litigation or action involving the Issuer’s Promoters, officers, directors or other key personnel that relates to or has affected or could affect the Issuer. Give an evaluation by management or counsel, to the extent feasible, of the merits of the proceedings or litigation and the potential impact on the Issuer’s business, financial condition or operations.)

 

(If there is no such litigation or action to disclose state: “The Issuer and its Promoters, officers, directors and key personnel are not currently and have not been subject to any litigation or administrative or criminal action that is or has been material to the Issuer. Nor is the Issuer or its Promoters, officers, directors or key personnel aware that any such litigation or action is pending or threatened.”)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

Canadian Income Tax Considerations

 

53.  This commentary is of a general nature only and is not intended to be tax advice to any particular investor. Prospective investors are urged to consult with their own professional advisors regarding the tax consequences applicable to them.

(Add narrative with respect to the significant income tax consequences to individuals who are residents of Canada under the Income Tax Act and the Equity Tax Credit Act. The narrative should address the following, if applicable:

 

              transfer of Shares to a Registered Retir[e]ment Savings Plan (RRSP);

              transfer of Shares to a Tax-Free Savings Account (TFSA);

              taxation of dividends or income received by Security holders on the Shares;

              treatment of capital gains or losses realized by Security holders on disposition;

              applicability of alternative minimum tax to Security holders;

              deductibility of interest expense on money borrowed to purchase Shares;

              availability of tax credits; and

              repayment of tax credits.)

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

(Provide the name and address of the professional advisors, if any, involved in the preparation of the answer to item 53. If no professional advisors have been used, please state “No professional advisors have been used in the preparation of the tax disclosure”.)

 

Material Contracts

 

54.  Particulars of every material contract (a contract that is fundamental to the business and day-to-day operations of the Issuer) entered into by the Issuer or, if applicable, any of its significant subsidiaries within 2 years before the date of the offering document:

 

Date

Name of Contract

Description

 

 

 

 

 

 

 

(Examples of “material contracts” are: contracts for the purchase of property, equipment or inventory; marketing contracts; financing agreements; management agreements; shareholder agreements; copyright or patent agreements.)

 

(Under the heading “Description”, include details as to the parties to the contract, what the contract is for and the important terms of the contract. Please state a time and place at which those material contracts or copies of them may be inspected during the distribution of the Shares or, alternatively, incorporate the contracts by reference and attach them to this document. If a material contract is of a confidential nature, provide a summary of it.)

 

Financial Statements

 

55.  Annual financial statements of the Issuer for the period ending (insert last fiscal year) are attached and form part of this document. Interim financial statements covering the period from (insert appropriate date) to (insert appropriate date) are also attached and form part of this document.

 

Note: If the Issuer proposes to invest or has invested 20% or more of the net proceeds of the total offerings to date or of the contemplated offering in an Investee Corporation, the most recent financial statements of the Investee Corporation must be attached and form part of this document.

 

(If the Issuer has carried on business but has not completed a fiscal year, state this, delete the first sentence above and attach an unaudited financial statement of the Issuer for the period ending no more than 60 days before the date of the offering document.)

 

(If the Issuer has completed 1 or more fiscal years, attach the financial statements complete with either an audit report or a review engagement report for the most recent completed fiscal year and unaudited financial statements for the period ending no more than 60 days before the date of the offering document.)

 

(If the Issuer does not have a prior operating history, state this and attach an opening balance sheet with either a completed audit report or a review engagement report and also state that those documents form part of this offering document.)

 

Continuous Reporting Obligations

 

56.  (a)    The Issuer will file with the Nova Scotia Securities Commission and send to Security holders annual financial statements and semi-annual interim financial statements as required by the CEDC Regulations.

 

       (b)    If a material change occurs in the operation of the Issuer, a press release along with a material change report must be filed with the Nova Scotia Securities Commission no later than 10 days after the date on which the change occurs.

 

Restrictions on Resale of Securities

 

57.  Under the Equity Tax Credit Act, a person who disposes of a share in respect of which a tax credit has been allowed within 5 years from the date of purchase is liable to repay the Minister of Finance and Treasury Board an amount equal to the tax credits received in respect of the share purchased, including interest, if interest is prescribed by the regulations made under that Act, or a lesser amount that is determined in accordance with the regulations under that Act.

[Note: The reference to the Minister of Finance has been updated in accordance with Order in Council 2013-348 under the Public Service Act, R.S.N.S. 1989, c. 376, effective October 22, 2013.]


Under Nova Scotia securities laws, trades by a Security holder of Shares of the Issuer purchased under this Offering will be restricted and each first trade and each subsequent trade will be a distribution unless, in accordance with subsection 2.5(2) of National Instrument 45-102, Resale of Securities:

 

       (a)    the Issuer is and has been a reporting issuer in a jurisdiction of Canada for the 4 months immediately preceding the trade;

 

       (b)    the Shares have been held for the 4-month hold period from the date of the initial exempt trade;

 

       (c)    the certificate representing the Shares carries a legend and there is notice of the restriction as set out in paragraphs 2.5(2), 3 and 3.1 of National Instrument 45-102, Resale of Securities;

 

       (d)    the trade is not a control distribution as defined in subclause 2(1)(l)(iii) of the Act;

 

       (e)    no unusual effort is made to prepare the market or to create a demand for the Shares;

 

       (f)     no extraordinary commission or consideration is paid to anyone in respect of the trade; and

 

       (g)    if the vendor is an insider or officer of the Issuer, the vendor has no reasonable grounds to believe that the Issuer is in default of securities legislation.

 

However, first and subsequent trades by a Security holder of Shares of the Issuer purchased under this Offering are permitted in the following circumstances, in accordance with clause 3(5)(b) of the CEDC Regulations:

 

       (a)    to the CEDC in accordance with section 2.15 of National Instrument 45-106, Prospectus and Registration Exemptions;

 

       (b)    to a self-directed registered retirement savings plan of the security holder or the security holder’s spouse;

 

       (c)    to the spouse of the security holder;

 

       (d)    to a tax-free savings account of the security holder or the security holder’s spouse;

 

       (e)    from a self-directed registered retirement savings plan of the security holder or the security holder’s spouse to the security holder;

 

       (f)     from a tax-free savings account of the security holder to the security holder or the security holder’s spouse;

 

       (g)    to a purchaser who owns shares of the CEDC and who is advised in writing by or on behalf of the vendor before entering into an agreement of purchase and sale that the purchaser will not accrue any advantage under the Equity Tax Credit Act as a result of the purchase; or

 

       (h)    to a purchaser who purchases by way of a trade made in compliance with the Act and any applicable Securities Rules.

 

Caution: The Shares are not listed on a stock exchange. There is no organized market through which these Shares may be sold. Therefore, investors may find it difficult or even impossible to sell their Shares.

 

Rights of Action

 

Items 58 and 59 describe the rights of action in Section 138 and subsection 146(2) of the Act.

 

58.  (1)    If

 

                (a)    an offering document sent or delivered to a purchaser, together with any amendment to the offering document; or

 

                (b)    any advertising or sales literature as defined by subsection 56(2) of the Act

 

contains a misrepresentation, a purchaser who purchases a security referred to in it is deemed to have relied on that misrepresentation, if it was a misrepresentation at the time of purchase.

 

       (2)    Under subsection 138(1) of the Act, a purchaser referred to in item 58(1)

 

                (a)    has a right of action for damages against

 

                         (i)     the seller,

 

                         (ii)    every director of the seller at the date of the offering document, and

 

                         (iii)   every person who signed the offering document;

 

or

 

                (b)    may elect to exercise a right of rescission against the seller, in which case the purchaser has no right of action for damages against any person or company under clause (a).

 

       (3)    No person or company is liable under subsection 138(1) of the Act if the person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation.

 

       (4)    No person or company is liable under subsection 138(1) of the Act if the person or company proves that

 

                (a)    the offering document or the amendment to the offering document was sent or delivered to the purchaser without the person’s or company’s knowledge or consent and, on becoming aware of its delivery, the person or company gave reasonable general notice that it was delivered without the person’s or company’s knowledge or consent;

 

                (b)    after delivery of the offering document or the amendment to the offering document and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the offering document, or amendment to the offering document, the person or company withdrew the person’s or company’s consent to the offering document, or amendment to the offering document, and gave reasonable general notice of the withdrawal and the reason for it; or

 

                (c)    with respect to any part of the offering document or amendment to the offering document purporting to be made on the authority of an expert, or to be a copy of or an extract from a report, opinion or statement of an expert, the person or company had no reasonable grounds to believe and did not believe that

 

                         (i)     there had been a misrepresentation, or

 

                         (ii)    the relevant part of the offering document or amendment to the offering document

 

                                  (A)   did not fairly represent the report, opinion or statement of the expert, or

 

                                  (B)   was not a fair copy of, or an extract from, the report, opinion or statement of the expert.

 

       (5)    No person or company is liable under subsection 138(1) of the Act with respect to any part of an offering document or amendment to the offering document not purporting to be made on the authority of an expert or to be a copy of or an extract from a report, opinion or statement of an expert, unless the person or company

 

                (a)    failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation; or

 

                (b)    believed that there had been a misrepresentation.

 

       (6)    Items 58(4) and (5) do not apply to the seller if the seller is also the Issuer.

 

       (7)    In an action for damages described in item 58(2)(a), the defendant is not liable for all or any part of the damages that the defendant proves does not represent the depreciation in value of the security resulting from the misrepresentation.

 

       (8)    The liability of all persons or companies referred to in item 58(2)(a) is joint and several with respect to the same cause of action.

 

       (9)    A defendant who is found liable to pay a sum in damages may recover a contribution, in whole or in part, from a person or company who is jointly and severally liable under Section 138 of the Act to make the same payment in the same cause of action unless, in all the circumstances of the case, the court is satisfied that it would not be just and equitable.

 

       (10)  The amount recoverable by a plaintiff under Section 138 of the Act may not exceed the price at which the securities were offered under the offering document or amendment to the offering document.

 

       (11)  The rights of action for rescission or damages described in this item are in addition to and without derogation from any other right or remedy that a Security holder might have at law.

 

       (12)  If a misrepresentation is contained in a record incorporated by reference in, or deemed incorporated into, an offering document or amendment to the offering document, the misrepresentation is deemed to be contained in the offering document or amendment to the offering document.

 

       (13)  For the purpose of item 58(1), advertising or sales literature is deemed not to contain a misrepresentation unless the advertising or sales literature

 

                (a)    contains an untrue statement of material fact; or

                (b)    omits to state a material fact that is necessary to prevent a statement contained in the advertising or sales literature from being misleading in light of the circumstances in which the statement was made.

 

       (14)  In this item, for greater certainty, “seller” includes the Issuer if the securities are distributed by the Issuer.

 

59.  An action must not be commenced to enforce the rights described in item 58 more than 120 days after the date on which payment was made for the Shares.

 

Certificate 

 

60.  This offering document, which has been prepared as prescribed by Form 1 of the CEDC Regulations, does not

 

       (a)    contain an untrue statement of material fact;

       (b)    omit to state a material fact required by Form 1; or

       (c)    omit to state a material fact necessary to make a statement in this offering document not misleading.

 

Dated at __________________________, on ___________________________ (date).

 

(This certificate must be signed by all of the following:

      the chief executive officer

      the chief financial officer

      on behalf of the board of directors, any 2 directors of the Issuer who are duly authorized to sign, other than the foregoing

      all promoters of the Issuer.)

 


Form 2: Report of a Trade

(Section 25 of the Community Economic-Development Corporations Regulations)

 

1.    Full name and address of the Vendor:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

2.    Name and address of the Community Economic-Development Corporation issuer of the security traded and description of the security:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

3.    Date of trade(s): ______________________________________________________________

 

4.    List of purchasers (see attached Schedule A)

 

5.    Name and address of any person acting as agent in connection with the trade(s) and the compensation paid or to be paid to the agent:

____________________________________________________________________________

       ____________________________________________________________________________

       ____________________________________________________________________________

 

The undersigned hereby certifies that the statements made in this report are true and correct.

 

Dated at ____________________, Nova Scotia, on ________________________ (date).

 

 

(signature)

by: (name)

(title or position)

 

 


Schedule A: List of Purchasers

 

Full Name(s) and Address(es)

of Purchaser(s)

 

Number of Shares Purchased

 

Purchase Price