BILL 28 – 2002
EMPLOYEE INVESTMENT AMENDMENT ACT, 2002

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

1 Section 1 of the Employee Investment Act, R.S.B.C. 1996, c. 112, is amended by repealing the definition of "hardship disposition".

2 Section 4 (1) (j) is repealed and the following substituted:

(j) that share transactions under paragraph (h) may be governed by limits set out in the plan if those limits, are based on a reasonable test of ability to pay; .

3 Section 10 (1) (k) is repealed and the following substituted:

(k) that share transactions under paragraph (i) may be governed by limits set out in the plan if those limits are based on a reasonable test of ability to pay; .

4 Section 13 is repealed and the following substituted:

Minimum investment requirements

13 (1) An employee venture capital corporation with a restricted constitution

(a) must invest an amount equal to at least 80% of any equity capital it has raised during its fiscal year in eligible investments no later than the end of its next fiscal year, and

(b) must afterwards keep at least the amount invested under paragraph (a) in eligible investments.

(2) An employee venture capital corporation that does not have a restricted constitution

(a) must invest an amount equal to at least a prescribed percentage of the equity capital it has raised during its fiscal year in accordance with a prescribed schedule, and

(b) must afterwards keep at least the prescribed percentage of the equity capital referred to in paragraph (a) in eligible investments.

(3) For the purposes of subsections (1) and (2), the amount invested in eligible investments must be ascertained using the cost, determined in the prescribed manner, of the investment.

(4) Despite subsection (2), the Lieutenant Governor in Council may postpone prescribing both the percentage and the schedule referred to in subsection (2) for a period not exceeding one year following the coming into force of this section, in order to allow for consultation as to the intended regulations under subsection (2).

(5) For the period before the Lieutenant Governor in Council prescribes the percentage and the schedule referred to in subsection (2) (a), the administrator by written order must specify for the purposes of subsection (2), and keep available for public inspection, both the percentage and the schedule referred to in subsection (2) (a).

5 Section 15 (2) is amended by striking out "under subsection (1)".

6 Section 30 is repealed and the following substituted:

Annual maximum tax credit

30 (1) The Lieutenant Governor in Council, for any year, may make regulations as follows:

(a) prescribing an amount as the annual maximum employee investment tax credit;

(b) subdividing the annual maximum employee investment tax credit into smaller annual maximum amounts, that may differ from each other, and allocating each of those smaller annual maximum amounts for corporations according to which of the criteria specified under paragraph (c) apply to them;

(c) for paragraph (b), specifying criteria applicable to corporations, which criteria may differentiate among corporations on any basis the Lieutenant Governor in Council considers appropriate, including but not limited to one or more of the following:

(i) whether the corporations have or do not have restricted constitutions;

(ii) whether the corporations are corporations with employee share ownership plans registered under Part 1 or are corporations registered under Part 2 as employee venture capital corporations;

(iii) the value, or the reported value, of the total consolidated assets of each of the corporations;

(iv) the level of the approved equity capital of each of the corporations;

(d) authorizing the administrator, in circumstances and on conditions that may be prescribed, to reallocate part of an amount allocated under paragraph (b) for corporations, regardless of which of the criteria prescribed under paragraph (c) apply to the corporations.

(2) The administrator must register a plan only if satisfied that the amounts that will be deductible or deducted under section 13.1 of the Income Tax Act during a particular year

(a) do not exceed the annual maximum employee investment tax credit for that year, and

(b) are within the allocations made under subsection (1).

(3) If, because of a regulation made under subsection (1) or a reallocation referred to in subsection (1) (d), continuation of plans registered under this Act would result in the level of the approved equity capital, for the corporations to which the plans apply, exceeding

(a) the annual maximum employee investment tax credit, or

(b) a smaller annual maximum amount allocated under subsection (1) (b) for corporations meeting criteria applicable to them as specified under subsection (1) (c),

the administrator must amend the plans by reducing the corporations' approved equity capital to reflect the regulation or reallocation, with effect as of the effective date of the regulation or reallocation, as the case may be.

(4) An agreement, arrangement or approval, whether made before or after the coming into force of this subsection, is, and has always been, without effect to the extent, if any, that it requires or required or purports or purported to require the government, the administrator or any person on behalf of either of them, in relation to a plan or intended plan or to a tax credit or intended tax credit,

(a) to do anything inconsistent with this Act or the regulations,

(b) to exercise a discretion under this Act in a specified manner, or

(c) to take any action toward achieving a specific outcome under this Act.

7 Section 31 (3) is repealed and the following substituted:

(3) Subsection (2) does not apply if

(a) the disposition is a trust disposition, or

(b) a tax credit repayment under subsection (2) had previously been made in respect of the shares disposed of.

8 Section 44 (2) is amended by adding the following paragraph:

(e) prescribing a method of establishing for purposes of this Act the value of assets of corporations with employee share ownership plans registered under Part 1 or corporations registered under Part 2 as employee venture capital corporations; .

No compensation

9 (1) No compensation is payable to a corporation or any other person

(a) because of or arising out of anything in this Act or the amendments made by this Act to the Employee Investment Act,

(b) because of or arising out of anything in a regulation made under section 30 (1) of the Employee Investment Act, as amended by this Act, or

(c) without limiting paragraph (a) and (b), because of or arising out of

(i) a reallocation by the administrator authorized by a regulation under section 30 (1) (d) of the Employee Investment Act, as amended by this Act,

(ii) a reduction in the corporation's approved equity capital required under section 30 (3) of the Employee Investment Act, as amended by this Act, or

(iii) the effect of subsection (4) of section 30 of the Employee Investment Act, as amended by this Act, on an agreement, arrangement or approval referred to in that subsection.

(2) No action lies, and an action or other proceeding must not be brought or maintained, against the government, the administrator or any other person for compensation or any other remedy arising as a direct or indirect consequence of

(a) the amendments made by this Act to the Employee Investment Act,

(b) anything in a regulation made under section 30 (1) of the Employee Investment Act, as amended by this Act, or

(c) the matters described in subsection (1) (c) (i), (ii) and (iii).

Acts to be given legal effect

10 (1) This Act and the Employee Investment Act as amended by this Act must be applied to and must be given effect in every action or other proceeding whether commenced before, on or after the date this Act receives Royal Assent.

(2) This Act and the Employee Investment Act as amended by this Act must not be construed as lacking effect, whether retroactive or otherwise, in relation to any matter because it makes no specific reference to that matter.

Transitional

11 Despite the amendments made by sections 1 to 3 and 7 of this Act to the Employee Investment Act, the definition of "hardship disposition" and sections 4 (1) (j), 10 (1) (k) and 31 (3) (b) and (c) of that Act, as they were immediately before the date this section comes into force, continue to apply in respect of shares that were held, immediately before that date, by a person in an employee investment plan registered under the Employee Investment Act.

Commencement

12 Section 30 (4) of the Employee Investment Act as enacted by section 6 of this Act is retroactive to the extent necessary to give it effect according to its intent.