Small Business Venture Capital (SBVC) Tax Credit Regulation

Small Business Venture Capital (SBVC) Tax Credit Regulation, M.R. 181/2007 The Income Tax Act , C.C.S.M. c. I10 Regulation 181/2007 Registered December 21, 2007 bilingual version (HTML) Table of Contents Section 1 Definitions and interpretation 1.1 Primary purpose of issuing qualifying security 1.2 When qualifying security is issued 2 Eligible small business corporation 2.1 Eligible partnership 3 Application for approval 4 Minister may approve proposed issuance 4.1 Annual maximum for all issuers 5 Eligibility for SBVC tax credit 6 SBVC tax credit receipt 7 Use of SBVC share proceeds 8 Temporary investment of share proceeds 9 Permitted transfer of equity share 9.1 Qualifying securities acquired on permitted exchange 10 Annual report 11 Recordkeeping 11.1 Late filing penalty for annual report 12 Penalty for failure to file report or keep records 13 Penalty if investment ceases to be eligible 14 Penalty for allowing prohibited transfer of qualifying security 14.1 Penalty for ineligible use of SBVC share proceeds 15 Penalty payable by successor corporation 16 Penalty is a debt and bears interest 17 Notice of assessment 18 Notice of objection 19 Corporation may appeal assessment or reassessment Definitions 1(1) The following definitions apply in this regulation. "accredited investor" means an accredited investor as defined in National Instrument 45-106, Prospectus Exemptions as adopted by the Manitoba Securities Commission. (« investisseur qualifié ») "Act" means The Income Tax Act . («  Loi  ») "active business" , "Canadian-controlled private corporation" , "fiscal period" and "related group" have the same meaning as in the federal Act. (« entreprise exploitée activement », « exercice », « groupe lié » et « société privée sous contrôle canadien ») "administrator" means the administrator appointed under subsection 11.13(1.1) of the Act or, if none is appointed, the Minister of Finance. (« administrateur ») "affiliate" of a corporation means a person or partnership that is affiliated with the corporation, as determined under section 251.1 of the federal Act, but does not include a person or partnership that is declared under subsection (2) not to be an affiliate of the corporation. (« affiliée ») "approval period" means a period during which an eligible small business corporation may issue qualifying securities as eligible investments. (« période d'autorisation ») "convertible right" means a right under a written agreement that entitles its holder to receive an equity share without the holder paying any further amount to receive the equity share, other than a right in relation to which there are terms or conditions (under an agreement, understanding or commitment in respect of the right) that (a) require, or entitle the holder or beneficial holder of the right to require, the right to be redeemed or purchased, or to be converted into anything other than an equity share, within the holding period for the right; (b) create a debt between the holder or beneficial holder of the right and any other person; or (c) will entitle the holder or beneficial holder of the right to a payment or benefit that would reduce any loss, or the impact of any loss, that the holder or beneficial holder might sustain in relation to the right. (« droit convertible ») "eligible investment" means a qualifying security that, when issued to an eligible investor or eligible partnership, is an investment for which an eligible investor may claim an SBVC tax credit. (« placement admissible ») "eligible partnership" means a partnership that meets the requirements of section 2.1. (« société en nom collectif admissible ») "eligible small business corporation" means a corporation that meets the requirements of section 2. (« petite entreprise admissible ») "equity share" means a share in the capital stock of a corporation, other than a share in relation to which there are terms or conditions (whether attached to the share or under an agreement, understanding or commitment in respect of the share) that (a) require, or entitle the holder or beneficial holder of the share to require, the share to be redeemed or purchased, or to be converted into anything other than an equity share, within the holding period for that share; (b) create a debt between the holder or beneficial holder of the share and any other person; or (c) will entitle the holder or beneficial holder of the share to a payment or benefit that would reduce any loss, or the impact of any loss, that the holder or beneficial holder might sustain in relation to the share. (« action participative ») "government assistance" means assistance from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or any other form of assistance. (« aide gouvernementale ») "holding period" , in relation to a qualifying security issued as an eligible investment, means the period beginning on the day the qualifying security was issued and ending three years after that day. (« période de détention ») "ineligible activity" means any of the following: (a) providing professional services that are regulated by a governing body of the profession under an Act of the Legislature; (b) providing management, administrative, financial or other similar services, unless they are provided primarily to one or more affiliates of the provider; (c) providing maintenance services, unless they are provided primarily to persons with whom the provider is dealing at arm's length; (d) leasing, developing or selling real property; (e) exploring for, developing or processing mineral, oil or gas resources; (f) farming (except for producing commercial crops in a climate-controlled environment), fishing, hunting or engaging in any other similar activity, but not the processing of products from those activities; (g) holding, operating or granting franchises; (h) operating a restaurant, lounge, bar or similar establishment, unless the executive director of the Liquor, Gaming and Cannabis Authority of Manitoba has granted a brew pub endorsement on a liquor service licence issued in respect of the premises; (i) providing services, if they are provided on behalf of a corporation by a specified shareholder of the corporation who, but for the existence of the corporation, would reasonably be regarded as an officer or employee of the person or partnership to whom the services are provided; (j) operating amusement or gaming facilities or activities; (j.1) operating facilities for the performing arts or organizing performing arts events; (k) providing educational, health care, social or other similar services. (« activité non admissible ») "issuer" means a corporation that has the approval to issue, or has issued, qualifying securities as eligible investments. It includes another corporation in relation to which an issuer is a predecessor. (« émetteur ») "minister" means the minister responsible for the administration of section 11.13 of the Act. (« ministre ») "predecessor" of a corporation means another corporation that (a) was wound up into the corporation or into a predecessor of the corporation in a winding-up to which subsection 88(1) of the federal Act applies; or (b) was amalgamated with one or more other corporations to form the corporation or to form a predecessor of the corporation. (« corporation remplacée ») "qualifying security" means a convertible right or an equity share. (« valeur admissible ») "SBVC share proceeds" means the amounts of money paid by one or more eligible investors and eligible partnerships for one or more qualifying securities issued to them as eligible investments. (« produit de l'émission ») "specified shareholder" means a person who would be a specified shareholder as defined in subsection 248(1) of the federal Act if the reference to "10%" in the part before clause (a) of that definition were read as "35%". (« actionnaire déterminé ») "subscription price" includes the amount of money paid by an eligible investor or eligible partnership for a convertible right. (« prix de souscription ») Declaration re affiliation 1(2) The minister, upon application by a corporation, may declare another person or partnership not to be an affiliate of the applicant for the purpose of a proposed issuance of qualifying securities by the applicant. Full-time equivalent employees 1(3) For the purpose of this regulation, the number of full-time equivalent employees of an employer for a calendar year is the total of (a) the number of full-time employees that were employed by the employer for the whole year; (b) for each employee who was a full-time employee of the employer for less than the whole year, the number of weeks in the year that the employee was so employed divided by 52; and (c) for each employee who was employed on a part-time basis for all or part of the year, (i) if the employee is paid a salary determined as a fraction of the salary that would be paid to a full-time employee, that fraction, and (ii) in any other case, the number of the employee's paid hours of work in the year — excluding those falling within the weeks, if any, that are taken into account under clause (b) — divided by 2,080. In this subsection, an employee who regularly works at least 40 hours per week is a full-time employee. Related persons 1(4) In this regulation, persons are related to each other if they are related to each other under the federal Act. 1(5) [Repealed] M.R. 34/2026 Meaning of "share of the partnership's investment" 1(6) For the purpose of this regulation, an investor's "share of the partnership's investment" in a qualifying security issued to an eligible partnership as an eligible investment is the amount of money (a) that is paid, during the approval period, by an eligible investor for an interest in the partnership; and (b) that, in the minister's opinion, the partnership pays to the issuer as the subscription price for the qualifying security. M.R. 6/2009 ; 118/2010 ; 158/2014 ; 128/2015 ; 107/2021 ; 34/2026 Primary purpose of issuing qualifying security 1.1 Despite any other provision of this regulation, a qualifying security is not an eligible investment if, in the minister's opinion, the primary purpose of issuing the qualifying security, or of a series of transactions or events that includes the issuance of the qualifying security, is to enable one or more persons to claim the SBVC tax credit. For this purpose, a series of transactions or events includes any related transaction or event completed in contemplation of the series. M.R. 34/2026 When qualifying security is issued 1.2(1) For the purpose of this regulation, (a) an equity share is deemed to be issued when it is irrevocably subscribed and paid for; and (b) a convertible right is deemed to be issued when the written agreement giving the convertible right is entered into and the convertible right is paid for. Effect of exercise of convertible right 1.2(2) For the purpose of this regulation, if the holder of a convertible right exercises their right to receive an equity share, (a) the exercise of the convertible right is deemed (i) not to be a disposition or transfer of the convertible right, and (ii) not to result in a redemption or cancellation of the convertible right; (b) the equity share is deemed to have been issued on the day that the convertible right was issued; and (c) the SBVC tax credit receipt provided in accordance with section 6 is deemed to have been provided for the equity share. M.R. 34/2026 Eligible small business corporation 2(1) A corporation is an eligible small business corporation when it satisfies all of the following requirements: CCPC with permanent establishment in Manitoba 1. The corporation is a Canadian-controlled private corporation — other than a financial institution and a prescribed venture capital corporation under Part LXVII of the federal regulations — with a permanent establishment in Manitoba. Assets used in active business 2. All or substantially all of the carrying value of the assets of the corporation is attributable to one or more of the following: (a) assets that are used principally in an active business carried on by the corporation or by an affiliate of the corporation; (b) assets consisting of shares or indebtedness of, or partnership or beneficial interests in, one or more affiliates of the corporation all or substantially all of the carrying value of the assets of each of which is attributable to assets described in clause (a) or this clause. Revenue from active business 3. The revenue of the corporation and its affiliates (determined on a combined and consolidated basis where applicable) for the most recently completed fiscal period was derived principally from one or more active businesses and not principally from property, ineligible activities or any combination of them. Minimum share equity 4. The corporation's stated capital is at least $25,000. Small business 5. Either (a) the corporation and its affiliates did not have, for the immediately preceding calendar year, more than 100 full-time equivalent employees; or (b) the gross revenue of the corporation and its affiliates (determined on a combined and consolidated basis, where applicable) for the most recently completed fiscal period is less than $15,000,000. Manitoba employees 6. At least 25% of the full-time equivalent employees of the corporation and its affiliates is attributable to employees who are resident in Manitoba. Not a reporting issuer 7. The corporation is not a reporting issuer as defined in The Securities Act . Under $10,000,000 limit 8. The total of all amounts, each of which is the consideration previously paid for qualifying securities issued by the corporation, an affiliate of the corporation or a predecessor of any of them as eligible investments, is less than $10,000,000. "Financial institution" defined 2(2) For the purpose of item 1 in subsection (1), "financial institution" means a corporation, partnership or trust that (a) carries on business as a bank, credit union or caisse populaire; (b) provides services as a trustee to the public; (c) carries on the business of insurance; (d) carries on business as a trader or dealer in securities; (e) carries on, as its principal business, the business of lending money, cashing cheques, purchasing and collecting or selling debt obligations, discounting tax refunds or rebates, or any combination of these activities; (f) derives more than 50% of its revenue from any combination of the businesses referred to in clauses (a) to (e); or (g) is an affiliate of a financial institution. M.R. 158/2014 ; 128/2015 ; 34/2026 Eligible partnership 2.1 A partnership is an eligible partnership if it satisfies each of the following requirements: Manitoba limited partnership 1. The partnership is a limited partnership formed under the laws of Manitoba. General partner is Manitoba resident 2. The partnership is managed by one or more general partners who (a) if the general partner is an individual, resides in Manitoba; or (b) if the general partner is a corporation, has a permanent establishment in Manitoba. M.R. 34/2026 Application for approval 3(1) Before issuing a qualifying security as an eligible investment, a corporation must apply for and obtain the minister's approval to do so. Content of application 3(2) The corporation's application must be in a form approved by the minister and must include the following: (a) a copy of its most recent annual financial statements, if any; (b) a copy of its most recent income tax return, if any, and the notice of assessment issued by the Canada Revenue Agency for the taxation year for which that return was filed; (c) a statement of the amount to be raised by issuing qualifying securities as eligible investments, and whether the approval is for qualifying securities to be issued in the current calendar year, or whether it is for qualifying securities to be issued in the immediately following year; (d) a copy of the terms and conditions, including any ownership restrictions, that will apply to the following: (i) the equity shares to be issued, (ii) the convertible rights to be issued, (iii) the equity shares to be issued on the exercise of the convertible rights; (e) a description of its proposed use of the SBVC share proceeds; (f) a statement certifying that the corporation is an eligible small business corporation; (g) any other information, undertakings and documents stipulated by the application form; (h) a statement, signed by an officer of the corporation, attesting to the completeness and accuracy of the information provided in the application and the accompanying documents. Minister may require additional information 3(3) When reviewing an application, the minister may require the applicant to provide any additional information or documents that the minister considers necessary to determine or verify the applicant's eligibility to issue qualifying securities as eligible investments. M.R. 6/2009 ; 118/2010 ; 34/2026 Minister may approve proposed issuance 4(1) Subject to subsections (3) and (4) and (6) to (8) and section 4.1, the minister may approve, with or without conditions, an application that meets the requirements of section 3. 4(2) [Repealed] M.R. 158/2014 Applicant must be eligible small business corporation 4(3) The minister must not approve a proposed issuance of qualifying securities unless the applicant satisfies the minister that it is an eligible small business corporation. Minimum and maximum per issuance 4(4) The minister must not approve a proposed issuance of qualifying securities if the total consideration for the qualifying securities to be issued (a) is less than $100,000; or (b) is more than the amount by which $10,000,000 exceeds the total SBVC share proceeds for qualifying securities previously issued by the corporation, by any of its affiliates, or by any predecessor of any of them. 4(5) [Repealed] M.R. 34/2026 Use of SBVC share proceeds 4(6) The minister must not approve a proposed issuance of qualifying securities if, in the minister's opinion, the proposed use of the SBVC share proceeds would be contrary to this regulation. Expiry of approval 4(7) Unless it is extended by the minister upon application by the issuer, an approval for qualifying securities to be issued as eligible investments expires on the date set out in the approval notice given to the issuer, which must be not more than 12 months after the day the approval was granted. Qualifying security not eligible unless issued as approved 4(8) A qualifying security that is issued after the approval expires is not an eligible investment unless its issuance is authorized by another approval. M.R. 6/2009 ; 118/2010 ; 158/2014 ; 128/2015 ; 169/2018 ; 34/2026 Annual maximum for all issuers 4.1 The minister must not approve a proposed issuance of qualifying securities for a calendar year if (a) the total consideration for all qualifying security issuances completed in the year to eligible partnerships exceeds $15,000,000; or (b) the total consideration for all qualifying security issuances completed in the year (including the total referred to in clause (a)) exceeds $30,000,000. M.R. 34/2026 Eligibility for SBVC tax credit 5(1) Subject to the Act, an eligible investor is eligible for an SBVC tax credit in respect of one or more qualifying securities if (a) the qualifying securities were issued as part of an issuance that was approved under section 4; (a.1) the qualifying securities were issued before the approval period expired (i) directly to the investor, or (ii) to an eligible partnership if the requirements of subsection (2) are met; (b) the issuer has satisfied the conditions, if any, that, under the terms of the approval granted by the minister, must be satisfied before the qualifying securities are issued; (c) the investor was not a specified shareholder of (i) the issuer, (ii) an affiliate of the issuer, or (iii) a predecessor of the issuer or an affiliate of the issuer, at any time within the 24-month period immediately preceding the issuance of the first qualifying security to be issued to the investor or the eligible partnership during the approval period; (c.1) the investor, or a person related to the investor, does not hold a convertible right of the issuer or an affiliate of the issuer immediately before the issuance of the qualifying securities; (d) either (i) the investor was an accredited investor at the time the qualifying securities were issued, or (ii) before acquiring the qualifying securities, the investor signed a statement of acknowledgement of risk, provided to the investor by the issuer in a form approved by the minister, and provided the signed statement to the issuer; (e) the investor did not, within the 24-month period preceding the issuance of the qualifying securities, dispose of any share in the capital stock, or convertible right, of the issuer, an affiliate of the issuer or a predecessor of any of them; (f) the subscription price paid by the investor for the qualifying securities, or the investor's share of the partnership investment in respect of the qualifying securities, is not less than $5,000; (g) immediately after the qualifying securities were issued, the total of all amounts each of which is an amount paid by the investor for, or the investor's share of the partnership's investment in respect of, qualifying securities issued as eligible investments by the issuer, an affiliate of the issuer or a predecessor of any of them, is not more than (i) $450,000, for shares issued before April 7, 2021, (ii) $500,000, for shares issued after April 6, 2021, until March 31, 2026, or (iii) $500,000, for qualifying securities issued after March 31, 2026; (h) the qualifying securities are not transferable except as permitted by this regulation; and (i) the investor is not entitled to any tax credit in respect of the qualifying securities under the Act other than the SBVC tax credit. Eligibility for tax credit through partnership 5(2) The requirements for the issuance of one or more qualifying securities to an eligible partnership are as follows: (a) immediately before the qualifying securities are issued to the partnership, the partnership does not hold a convertible right issued by the issuer or an affiliate of the issuer; (b) the investor has paid an amount of money during the approval period for an interest in the partnership and the partnership has paid some or all of the amount as the subscription price for the qualifying securities; (c) the investor has not, within the 24-month period preceding the issuance of the qualifying securities, disposed of an interest in an eligible partnership that held a qualifying security of the issuer, an affiliate of the issuer or a predecessor of any of them; (d) the partnership has not, within the 24-month period preceding the issuance of the qualifying securities, disposed of a qualifying security of the issuer, an affiliate of the issuer or a predecessor of any of them; (e) before issuing the qualifying securities to the partnership, the issuer has provided to the minister (i) a copy of the partnership's most recent annual financial statements, if any, (ii) a copy of the partnership's most recent income tax information return, if any, and the documents required to be filed with the return, (iii) a copy of the partnership agreement and any terms and conditions, including any ownership restrictions, relating to interests in the partnership, (iv) a copy of any declaration made and registered as required under The Business Names Registration Act in the 24-month period preceding the day of the delivery, (v) a list of the eligible investors and their respective shares of the partnership's investment, and (vi) any other information and documents stipulated by the minister. Exception 5(3) Clause (2)⁠(a) applies to a partnership only if a person or a related group has contributed 35% or more of the capital contributed to the partnership. M.R. 6/2009 ; 118/2010 ; 169/2018 ; 107/2021 ; 34/2026 SBVC tax credit receipt 6(1) Every SBVC tax credit receipt provided by an issuer in respect of qualifying securities issued as eligible investments must be provided using a form of receipt provided by the minister to the issuer, and must contain the following information: (a) the name and address of the investor and (i) in the case of an individual, their social insurance number, or (ii) in the case of a corporation, its business number for the purposes of the Act; (b) the name and address of the issuer, and any other name under which it is carrying on business; (b.1) if the qualifying securities are issued to an eligible partnership, the name and business number of the partnership; (c) the calendar year in which the eligible investment was issued to the investor or the eligible partnership; (d) if the qualifying securities are equity shares, the number of shares to be issued to the investor or eligible partnership; (d.1) the amount of money paid by the investor as the subscription price for the qualifying securities or the investor's share of the partnership's investment in respect of the qualifying securities; (e) the amount of the SBVC tax credit that is available to the investor in respect of the qualifying securities or would be available if the investor received no government assistance in respect of the qualifying securities; (e.1) a unique serial number provided to the issuer by the minister after receiving the information to be provided under subsection (3); (f) any other information stipulated by the form of receipt approved by the minister. Cost of qualifying securities 6(2) For the purpose of subsection 11.13(3) of the Act, the cost to an investor of qualifying securities issued directly to the investor as an eligible investment is deemed to be the amount by which (a) the amount of money paid by the investor as the subscription price for the qualifying securities; exceeds (b) the amount of government assistance, other than the SBVC tax credit, received by the investor in respect of the qualifying securities. Share of partnership's cost 6(2.1) For the purpose of subsection 11.13(3) of the Act, the investor's share of the cost of qualifying securities acquired as an eligible investment by an eligible partnership is deemed to be the amount by which (a) the investor's share of the partnership's investment in respect of the qualifying securities; exceeds (b) the amount of government assistance, other than the SBVC tax credit, received by the investor in respect of the partnership or qualifying securities. Information required before receipt serial numbers are provided 6(3) Before the minister provides an issuer with serial numbers for the SBVC tax credit receipts to be issued by the issuer, the issuer must provide the following information, attested to by the issuer's lawyer, to the minister for each receipt to be issued to an investor: (a) the name of the investor; (a.1) if the receipt is to be issued in respect of qualifying securities issued to an eligible partnership, the name of the partnership; (b) subject to subsection (4), a statement confirming that the investor is an accredited investor; (c) if applicable, the number of equity shares purchased by the investor and the number of the share certificate issued in respect of those shares; (c.1) if applicable, a copy of each agreement under which a convertible right was issued to the investor; (d) the total amount of money paid by the investor as the subscription price for the qualifying securities or the investor's share of the partnership's investment in respect of the qualifying securities; (d.1) if applicable, a statement confirming that the investor paid an amount to acquire an interest in an eligible partnership during the approval period for the qualifying securities; (e) a statement confirming that the subscription price was paid to the lawyer in trust pending the issuance of the qualifying securities, that the qualifying securities were issued to the investor or the eligible partnership and that, after they were issued, the subscription price was paid out of the trust account to the issuer's account with a bank or other financial institution; (f) the name and address of the bank or other financial institution referred to in clause (e), and the number of the issuer's account to which the subscription price was paid or credited; (g) any other information required by the minister. Acknowledgement-of-risk statement 6(4) If the issuer's lawyer cannot verify that the investor is an accredited investor, the issuer must provide to the minister, in lieu of such a statement, a copy of the investor's signed acknowledgement-of-risk statement. Receipts to be issued within 30 days 6(5) Within 30 days after receiving the serial numbers from the minister, the issuer must (a) issue the SBVC tax credit receipts to be issued with those serial numbers; and (b) provide a copy of each receipt to the minister. M.R. 118/2010 ; 34/2026 Issuer to use proceeds within holding period 7(1) Subject to subsections (1.1), (2) and (3), the issuer must use the SBVC share proceeds, within the holding period for the qualifying securities that resulted in those proceeds, to support an active business carried on in Manitoba by the issuer or an affiliate of the issuer. Use of proceeds as approved 7(1.1) Subject to subsection (2), the issuer must use the SBVC share proceeds only for the following purposes: (a) the purpose described in the issuer's application for approval to issue the qualifying securities as eligible investments; (b) any other purpose approved by the minister, subject to subsection (3), upon application by the issuer after receiving the minister's approval to issue the qualifying securities as eligible investments. Expenses of issuing qualifying securities 7(2) SBVC share proceeds may be used to pay reasonable expenses incurred by the issuer in issuing the qualifying securities, to the extent that they are payable to persons with whom the issuer is dealing at arm's length. Prohibited uses of share proceeds 7(3) SBVC share proceeds must not be used directly or indirectly for any of the following: (a) investment outside Manitoba; (b) to lend money, except to an affiliate controlled by the issuer for use by the affiliate in a manner in which SBVC share proceeds may be used by the issuer; (c) to pay for a business reorganization, including a merger, amalgamation or winding-up; (d) to acquire an interest in land, unless the land is to be used principally in an active business carried on by the issuer or an affiliate of the issuer, other than a business that derives revenue primarily from one or more ineligible activities; (e) to pay a dividend, make an advance or return capital to a shareholder of the issuer; (f) to pay an amount owing by the issuer or an affiliate of the issuer to (i) a shareholder of the issuer, (ii) an affiliate of the issuer, or a shareholder or member of such an affiliate, or (iii) a person related to a shareholder or member referred to in subclause (i) or (ii); (g) to purchase goods or services from a shareholder or affiliate of the issuer or from a shareholder or member of an affiliate of the issuer, other than goods or services that are purchased at fair market value in the ordinary course of the seller's business as a seller of those goods or services to the public; (h) to support an ineligible activity or repay indebtedness incurred in connection with an ineligible activity; (h.1) to purchase, develop or maintain land for use in playing or practising a sport; (h.2) to purchase or maintain equipment for playing or practising a sport or for developing or maintaining land for use in playing or practising a sport; (i) to support an activity if, in the opinion of the minister, (i) it would be contrary to public policy to support the activity with public funds, or (ii) the activity does not constitute or promote economic development. Definition of "shareholder" 7(4) For the purpose of this section, "shareholder" includes the holder of a convertible right. M.R. 6/2009 ; 118/2010 ; 34/2026 Temporary investment of share proceeds 8 Until they are used as required by section 7, SBVC share proceeds may be invested only in one or more of the following: (a) money on deposit with (i) a bank to which the Bank Act (Canada) applies, (ii) a credit union or caisse populaire to which The Credit Unions and Caisses Populaires Act applies, or (iii) a trust company that is incorporated under the laws of Canada or of a province of Canada and is carrying on the business of a trust company in Manitoba; (b) a short-term guaranteed investment certificate issued by a financial institution mentioned in clause (a); (c) an interest in a money market fund that may be redeemed upon demand. M.R. 118/2010 Permitted transfer of equity share 9(1) An equity share that was issued as an eligible investment may be transferred (a) at any time after the end of the holding period for that share, subject only to the restrictions, if any, applicable to the share under the articles of the issuer or under an agreement respecting the share; or (b) during the holding period, but only (i) as a consequence of the death of the shareholder, to the shareholder's estate or heirs, (ii) if it is being transferred to a person who is not an affiliate of the issuer and who has agreed to purchase all of the outstanding shares of the issuer, (iii) if it is being transferred as part of a pro rata transfer of shares by existing shareholders to an underwriter, as part of an initial public offering, in order to satisfy a market demand for shares that exceeded the number of shares to be issued from the issuer's treasury, or (iv) with the minister's approval, to the issuer or an affiliate of the issuer in exchange for another share of the issuer or the affiliate, as part of a corporate reorganization. Permitted transfer of convertible right 9(1.1) A convertible right that was issued as an eligible investment may be transferred (a) at any time after the end of the holding period for that convertible right, subject only to the restrictions, if any, applicable to the convertible right under an agreement respecting the convertible right; or (b) during the holding period, but only (i) as a consequence of the death of the holder, to the holder's estate or heirs, or (ii) with the minister's approval, to the issuer or an affiliate of the issuer in exchange for another convertible right of the issuer or the affiliate, as part of a corporate reorganization. Permitted transfer of partnership interest 9(1.2) An interest in an eligible partnership that was acquired by an eligible investor in the course of becoming eligible to claim the SBVC tax credit may be transferred (a) at any time after the end of the holding period for the qualifying security issued to the partnership, subject only to the restrictions, if any, applicable to the interest under an agreement respecting the partnership interest; or (b) during the holding period for the qualifying security issued to the partnership, but only (i) as a consequence of the death of the interest holder, to the holder's estate or heirs, or (ii) with the minister's approval, to the partnership or another person or partnership in exchange for another partnership interest as part of a reorganization of the partnership. 9(2) [Repealed] M.R. 34/2026 M.R. 34/2026 Qualifying securities acquired on permitted exchange 9.1 For the purposes of sections 11.15 and 11.16 of the Act and this regulation, a qualifying security acquired on an exchange referred to in subclause 9(1)⁠(b)⁠(iv) or (1.1)⁠(b)⁠(ii) is deemed to have been issued as an eligible investment at the time that the qualifying security for which it was exchanged was issued. M.R. 34/2026 Annual report 10(1) For the fiscal period in which an issuer issues a qualifying security as an eligible investment, and for each fiscal period of the issuer that begins during the holding period of the qualifying security, the issuer must provide to the administrator a report consisting of: (a) a copy of the issuer's financial statements for the fiscal period that have been prepared, reviewed or audited by a professional accountant who is not an officer or employee of the issuer; (b) an information return, in a form approved by the Minister of Finance, that includes (i) details of all SBVC share proceeds received within the three-year period ending at the end of the fiscal period, including when the proceeds were received and how and when they were used or invested or are intended to be used or invested, (ii) details of each share transfer or redemption that occurred within the fiscal period, if it occurred during the holding period of the share, (ii.1) details of each transfer of a convertible right, or the issuance of shares in accordance with the exercise of the convertible right, that occurred within the fiscal period, if it occurred during the holding period of the convertible right, (iii) details of any transactions within the fiscal period that resulted in a return of capital on a share during the holding period of the share, (iv) any other information that the Minister of Finance or the administrator requires to determine compliance with sections 11.13 to 11.16 of the Act and this regulation or to gauge the effectiveness of the SBVC tax credit program, (v) a statement, signed by an officer of the issuer, attesting to the completeness and accuracy of the information included in the return, and (c) if an eligible partnership holds the qualifying security, (i) a copy of the partnership's most recent annual financial statements, (ii) a copy of the partnership's most recent income tax information return, if any, and the documents required to be filed with the return, (iii) a copy of any declaration made and registered as required under The Business Names Registration Act in respect of the partnership during the fiscal period, and (iv) an information return, in a form approved by the Minister of Finance, that includes (A) details of any changes to the partnership agreement and any terms and conditions relating to interests in the partnership, including ownership of interests, and (B) a list of the partners and their respective capital contributions to the partnership. Due date for annual report 10(2) The annual report to be provided under subsection (1) for a fiscal period must be filed with the administrator within 180 days after the end of the period. M.R. 118/2010 ; 128/2015 ; 34/2026 Recordkeeping 11(1) An issuer that receives SBVC share proceeds must keep records in such form and containing such information as the Minister of Finance or the administrator considers necessary to verify information contained in an SBVC tax credit receipt or information provided under section 10. Where and how long records to be kept 11(2) An issuer required to keep records under this section (a) must keep them at its head office in Manitoba or at any other location in Manitoba approved by the administrator; and (b) must retain them for the period of time that a person's records are required by the Act to be retained for the purposes of administering and enforcing the Act. M.R. 118/2010 Late filing penalty for annual report 11.1(1) Subject to subsection (2), an issuer who files an annual report after the filing deadline set out in subsection 10(2), but within the time period set out in column 1 of the following table, must pay the Minister of Finance the late filing penalty set out opposite in column 2. COLUMN 1 Report Filed COLUMN 2 Late Filing Penalty 1 to 30 days after the deadline $2,500 31 to 60 days after the deadline $5,000 Increased late filing penalty 11.1(2) The penalty for an issuer referred to in subsection (1) who was subject to a penalty under this section or section 12 in the previous five years is twice the amount determined under subsection (1). M.R. 107/2021 Penalty for failure to file report or keep records 12 If an issuer fails to file a report as required by section 10 within 61 days after the deadline or keep records as required by section 11, the issuer must pay to the Minister of Finance, upon receipt of a notice of assessment by the administrator, a penalty not exceeding the total of (a) 30% of the SBVC share proceeds that were received by the issuer or a predecessor of the issuer within the period to which the report or the records relate for shares issued before June 12, 2014; (b) 45% of the SBVC share proceeds received by the issuer or a predecessor of the issuer within the period to which the report or the records relate for shares issued after June 11, 2014, until March 31, 2026; and (c) 45% of the SBVC share proceeds received by the issuer or a predecessor of the issuer within the period to which the report or the records relate for qualifying securities issued after March 31, 2026. M.R. 118/2010 ; 158/2014 ; 107/2021 ; 34/2026 Investment ceasing to be eligible 13(1) For the purpose of clause 11.17(1)⁠(f) of the Act, a qualifying security that was issued as an eligible investment ceases to be an eligible investment if, within three years after it was issued, (a) the issuer ceases to have a permanent establishment in Manitoba; or (b) less than 25% of the full-time equivalent employees of the issuer and its affiliates is attributable to employees who are resident in Manitoba, unless it occurs as a result of a purchase of all of the shares of the issuer by a person who is not an affiliate of the issuer. Penalty 13(2) The issuer of a qualifying security that ceases to be an eligible investment must pay to the Minister of Finance, upon receipt of a notice of assessment by the administrator, a penalty not exceeding (a) in the case of a share issued before June 12, 2014, 30% of the SBVC share proceeds from the share; (b) in the case of a share issued after June 12, 2014, until March 31, 2026, 45% of the SBVC share proceeds from the share; and (c) in the case of a qualifying security issued after March 31, 2026, 45% of the SBVC share proceeds from the qualifying security. M.R. 118/2010 ; 158/2014 ; 34/2026 Penalty for allowing prohibited transfer of qualifying security 14(1) If an issuer allows a qualifying security to be transferred in contravention of section 11.15 of the Act, the issuer must pay to the Minister of Finance, upon receipt of a notice of assessment by the administrator, a penalty not exceeding (a) in the case of a share issued before June 12, 2014, 30% of the SBVC share proceeds from the share; (b) in the case of a share issued after June 11, 2014, until March 31, 2026, 45% of the SBVC share proceeds from the share; and (c) in the case of a qualifying security issued after March 31, 2026, 45% of the SBVC share proceeds from the qualifying security. Penalty for allowing prohibited transfer of partnership interest 14(2) If an interest in an eligible partnership is transferred in contravention of subsection 9(1.2), the issuer must pay to the Minister of Finance, upon receipt of a notice of assessment by the administrator, a penalty not exceeding 45% of the share of the partnership's investment in respect of the interest. M.R. 118/2010 ; 158/2014 ; 34/2026 Penalty for ineligible use of SBVC share proceeds 14.1(1) If an issuer uses SBVC share proceeds for an ineligible activity or in a manner prohibited by subsection 7(3), the issuer must pay to the Minister of Finance, upon receipt of a notice assessment by the administrator, a penalty not exceeding (a) in the case of SBVC share proceeds of an investment issued before June 12, 2014, 30% of the SBVC share proceeds so used; and (b) in the case of SBVC share proceeds of an investment issued after June 11, 2014, 45% of the SBVC share proceeds so used. Penalty for failure to use SBVC share proceeds 14.1(2) If an issuer fails to use SBVC share proceeds as required by subsection 7(1), the issuer must pay to the Minister of Finance, upon receipt of a notice assessment by the administrator, a penalty not exceeding (a) in the case of SBVC share proceeds of an investment issued before June 12, 2014, 30% of the SBVC share proceeds not used as required; and (b) in the case of SBVC share proceeds of an investment issued after June 11, 2014, 45% of the SBVC share proceeds not used as required. M.R. 118/2010 ; 158/2014 ; 34/2026 Obligations of successor corporation 15 If an issuer ceases to exist as a result of an amalgamation or winding-up, (a) each corporation in relation to which the issuer is a predecessor is deemed for the purposes of this regulation and sections 11.13 to 11.16 of the Act to have issued as eligible investments the qualifying securities that were issued — or are deemed by this section to have been issued — by the predecessor as eligible investments; and (b) a penalty under section 11.1, 12, 13, 14 or 14.1 of this regulation or subsection 11.14(2) of the Act may be imposed on a corporation referred to in clause (a), even if it relates to something that was done or not done by the predecessor. M.R. 118/2010 ; 34/2026 Penalty is a debt and bears interest 16(1) A penalty imposed under this regulation is a debt due to the government by the corporation liable to pay it, and bears interest in accordance with the regulations under The Financial Administration Act from the date it becomes payable until it is paid in full. Power to collect debt 16(2) The Minister of Finance has the same powers to collect the debt that the director under The Tax Administration and Miscellaneous Taxes Act has under Part I, Division 5, of that Act to collect a tax debt under that Act, other than a tax debt of a collector. M.R. 118/2010 Notice of assessment 17(1) When the administrator imposes a penalty under this regulation, the administrator must cause the notice of assessment of the penalty to be served on the corporation against whom it is imposed, and must provide a copy of it to the Minister of Finance. Assessment deemed correct 17(2) The assessment is deemed to be correct unless it is rescinded or revised by the Minister of Finance after a review under section 18 or by the court on an appeal under section 19. M.R. 118/2010 ; 128/2015 Notice of objection 18(1) Within 90 days after receiving a notice of assessment, the assessed corporation may dispute it by filing with the Minister of Finance a notice of objection setting out the facts and the reasons for the objection. Minister of Finance may confirm, vary or rescind assessment 18(2) After reviewing the notice of objection and the administrator's response to it, the Minister of Finance must (a) confirm, vary or rescind the assessment; or (b) refer the matter to the administrator for reassessment of the penalty in accordance with any directions the Minister of Finance considers appropriate. Notice of minister's decision 18(3) The Minister of Finance must notify the corporation of their decision and must provide written reasons for the decision. Notice of reassessment 18(4) If the matter is referred back to the administrator for reassessment, the administrator must prepare and issue a notice of reassessment in accordance with the Minister of Finance's directions. Section 17 applies to the notice of reassessment as if it were an original notice of assessment. M.R. 118/2010 ; 128/2015 ; 107/2021 ;

34/2026 Corporation may appeal assessment or reassessment 19(1) Within 90 days after receiving a copy of the Minister of Finance's decision under section 18 or, if subsection 18(4) applies, within 90 days after receiving the notice of reassessment, the corporation may appeal the assessment or reassessment to the Court of King's Bench by applying to the court for an order under this section. Parties 19(2) The parties to the appeal are the appellant and the government, but the administrator is entitled to appear and be heard on the appeal. Notice to minister and administrator 19(3) As soon as practicable after filing its application with the court, the corporation must serve a copy of the application on the Minister of Finance and the administrator. Court decision 19(4) After hearing the appeal, the court may (a) affirm, rescind or vary the assessment or reassessment; and (b) make any order as to costs that the court considers appropriate. M.R. 118/2010 ; 128/2015 ; 107/2021