#1Alberta Investor Tax Credit (AITC) Guidelines Tax credit to encourage investment in businesses that are bringing new products and services to market and creating jobs in Alberta. Alberta#2Alberta Investor Tax Credit Program Published by Alberta Economic Development and Trade January 2019 www.alberta.ca/alberta-investor-tax-credit.aspx 2019 Government of Alberta. This publication is issued under the Open Government License - Alberta (http://open.alberta.ca/licence). 2 Alberta Investor Tax Credit Program | January 2019#3Table of Contents Program Overview. Application Dates..... Program Eligibility. Eligible Business Activities Ineligible Business Activities... Funding....... Diversity and Inclusion Supplement. Program Structure and Application Process Step 1: Create a user account through the online application portal. Step 2: Register as an EBC or VCC Step 3: Apply for Approval to Raise Additional Equity Capital Step 4: Raise Equity Capital... Step 5: Apply for Tax Credit Certificates Step 6: Delivery of Tax Credit Certificates Holding and Reporting Requirements. Additional Information. Recognition............ Freedom of Information and Privacy (FOIP). .5 .5 8 .13 .14 .15 16 16 16 17 17 18 19 19 .21 21 22 222 3 Alberta Investor Tax Credit Program | January 2019#4Program Overview The Alberta Investor Tax Credit (AITC) encourages investment in businesses that are bringing new products and services to market and creating jobs in Alberta. The AITC offers a 30 per cent tax credit to Alberta investors who provide equity capital to small Alberta businesses substantially engaged in: • • • tourism activities such as resorts, skiing facilities, amusement and recreation facilities hunting and fishing camps, scenic and sightseeing transportation; research, development and commercialization of proprietary technology, products and processes; development of interactive digital media and game products; post-production, visual effects and digital animation. The AITC is offered on a first-come, first-served basis. In summary, there are six key steps to the program: 1. An Eligible Business Corporation (EBC) or Venture Capital Corporation (VCC) creates a user profile through the AITC's online application portal. 2. EBC/VCC applies for registration with the AITC program. 3. Once registration is approved, the AITC Program Eligibility Only Eligible Business Corporations (EBCs) and eligible Venture Capital Corporations (VCCS) are eligible to apply to the AITC program. registered EBC or VCC applies for approval to raise equity capital. 4. Once approval to raise equity capital has been granted, the EBC or VCC will independently raise equity. 5. The EBC or VCC will then apply for the Tax Credit Certificate on behalf of the investor. 6. Once approved, the Tax Credit Certificate will then be provided to the EBC or VCC who will provide it to the investor. EBCs and VCCs that have been approved for Tax Credit Certificates on behalf of their investors are required to provide annual reports and ensure that the shares are not redeemed for a period of five years. 4 Alberta Investor Tax Credit Program | January 2019#5. • Please note: A public record of the remaining annual program budget is available on the AITC program webpage. Corporations should not delay investments while waiting for determination of eligibility. Investments made prior to approval may be eligible, if funds meet all requirements of additional equity raised. VCCs can invest in small businesses that are conducting business activity in the eligible areas, but are not officially registered as EBCs. The VCC has the responsibility to ensure the small business is compliant with the Investing in a Diversified Alberta Economy Act. VCCs may encourage small businesses to apply for registration with the AITC program as an EBC. The AITC program is guided by the Investing in a Diversified Alberta Economy Act and the Regulation. It is the responsibility of prospective and current participants to familiarize themselves with these documents. Application Dates Program intake opens at the beginning of each fiscal year (April 1) with a new annual budget and remains open until the annual budget has been fully allocated. Tax credits are available on any eligible investment made after January 1, 2017, provided the business registers with the program and both the business and investor meet the program requirements. Tax credit certificates are issued on a first-come, first-served basis until the annual budget is expended. The remaining budget available for tax credits can be viewed on the program webpage. Program Eligibility In order to be eligible for the tax credit, investors must pay personal or corporate taxes in Alberta and invest in eligible small businesses or Venture Capital Corporations in Alberta Both individuals and corporations are able to invest under the AITC. This includes: 5 • accredited investors (e.g. angel investors); • friends, family and business associates of the business owner; . corporate investors; Alberta Investor Tax Credit Program | January 2019#6. venture capital corporations; and non-accredited businesses who meet the prospectus exemption as outlined by the Alberta Securities Commission (ASC). In order to receive a tax credit, an investor must be considered an "eligible investor" as per section 35.01 of the Alberta Personal Income Tax Act for an individual, or section 5 of the Alberta Corporate Tax Act for a corporation. In addition, eligible investors who wish to receive tax credit for an investment made in to an EBC must not: • Have sold or otherwise disposed of shares in the EBC in the two years prior to the investment date for which tax credit is requested. Own more than 50 per cent of voting shares in an EBC either alone, or in conjunction with affiliates and/or associates. Definitions of affiliates and associates can be found in Section 2 of the Investing in a Diversified Alberta Economy Act. For an investor to be eligible for a tax credit for an investment made into an EBC the business they are investing in must also meet all of the eligibility criteria outlined below. Please note: • A partnership structure is not eligible to receive a tax credit under the AITC program. Investors are required to invest into an EBC or VCC entity as defined in the Investing in a Diversified Alberta Economy Act. In order to be eligible to register under the AITC as an EBC, a business must: • have no more than 100 employees, including affiliates; be incorporated, continued or extra-provincially registered under the Business Corporations Act of Alberta; if exporting, pay at least 50 per cent of wages to employees who report to work in Alberta; if non-exporting, pay at least 75 per cent of wages to employees who report to work in Alberta; have more than 80 per cent of assets located in Alberta; and have at least $25,000 in equity capital. Additionally, for businesses to be eligible under the AITC, they need to be substantially engaged (at least 50 per cent of the company's activities) in at least one of the following eligible activities: 6 Alberta Investor Tax Credit Program | January 2019#7• research, development and commercialization of proprietary technology, products and processes; development of interactive digital media and game products; post-production, visual effects and digital animation; or tourism activities - such as resorts, skiing facilities, amusement and recreation, hunting and fishing camps, scenic or sightseeing transportation. Please note: • A small business that has received, or may receive, funding from the Alberta Enterprise Corporation is eligible for the program if it meets all other eligibility requirements. Changes to articles of incorporation that restrict the business are intended for VCCs only and are not required for EBCs. Flow-through shares are not eligible for tax credit under the Alberta Investor Tax Credit program. An investment in an EBC for which tax credit was provided must be held by the investor (not sold or transferred) for five years from the date of share issuance, otherwise the tax credit will be revoked. Publically traded companies: The functionality of the program for publically traded companies is currently under review. Publically traded companies interested in the AITC are encouraged to contact AITC program staff to discuss their situation and options prior to registering with the program. All EBCs registered with the program must be able to provide a complete shareholder register (and/or other information) to demonstrate that: • • • the investor seeking tax credit has not sold shares in the EBC in the previous two years; the investor seeking tax credit does not control more than 50 per cent of the voting rights to the EBC either directly or indirectly through associates and affiliates; and the investor who receives tax credit holds their shares for the required five-year period. Measures to enable publically traded companies to meet these requirements may include creating and issuing a special class of shares for investors who will be requesting tax credit that cannot be sold for period of five years; holding shares in escrow or with a broker and/or providing assurance that investors who have received tax credit still hold their shares. Other measures may include providing the program with certifications to confirm that the investor(s) is eligible to receive tax credit. Please note that to be eligible for a tax credit, the equity must be newly issued shares from the small business. Traded shares bought on an exchange are not eligible for the tax credit. 7 Alberta Investor Tax Credit Program | January 2019#8In order to be eligible to register under the AITC as a VCC, a business must: • be registered under the Business Corporations Act of Alberta; have equity capital of at least $25,000 at the time of registration; • not have previously carried on business (cannot be a pre-existing VCC); • have a share structure consisting of only common shares that have no special rights or restrictions and/or common shares that have rights or restrictions relating only to the redemption of the shares by the corporation; and have articles of incorporation that restrict its business to assisting the development of eligible small businesses, as directed in the Regulation. Eligible Business Activities EBCs and businesses receiving investments from VCCs must be engaged in the business activities outlined below to be eligible for the program: 1. Development and operation of a destination tourist resort, attraction or a tourist service The purpose is: • to incent Alberta investors to invest in tourism projects that will create jobs and support diversification; and to incent Alberta investors to develop new tourism products in targeted geographic areas of the province (outside a national park of Canada). Some examples of tourism related businesses that can be considered eligible for the AITC program are destination resorts, tourist services and attractions. To qualify under this activity, a business must demonstrate that it: i. iii. Resorts earns or will earn 50 per cent or more of its gross revenues from tourists. A "tourist" is an individual who resides more than 40 kilometres from the destination resort or attraction. is located outside of the Canadian National Parks, and operates or will operate concurrently for at least 120 consecutive days a year. This industry is comprised of establishments primarily engaged in providing short-term lodging. Resorts are designed to accommodate vacationers and provide no fewer than four full-service suites and guest rooms. Establishments of this type often provide access to conference facilities. 8 Alberta Investor Tax Credit Program | January 2019#9These establishments feature extensive indoor and/or outdoor leisure activities, retail, commercial, and restaurant or food services on the premises. Examples may include: Resorts with integrated health spa facilities (such as Nordic spa and yoga retreat) Ski lodges and resorts Skiing facilities This industry is comprised of establishments primarily engaged in operating downhill and cross- country skiing areas, and equipment, such as ski lifts and tows. These establishments often provide retail, commercial, equipment rental, ski instruction and restaurant or food services. Examples may include: • Alpine skiing facilities . Cross country skiing facilities Downhill skiing facilities Ski lift and tow operations Ski resorts, without accommodations All other amusement and recreation industries This is comprised of establishments primarily engaged in operating recreation and amusement facilities and services. These establishments also provide retail, commercial, and restaurant or food services. Examples may include: Outdoor adventure operations (such as white water rafting, zip lines and water slides), without accommodation Indoor recreational operations . Hunting or fishing guide services • Off Highway Vehicle (OHV) and snowmobile parks Recreational vehicle (RV) parks, campgrounds and vacation camps This includes establishments primarily engaged in operating recreational vehicle parks, campgrounds, overnight recreational camps, outdoor adventure retreats and comfort camping. It also includes establishments that operate serviced or unserviced sites to accommodate campers and their equipment, including tents, tent trailers, travel trailers and RVs (recreational vehicles). These establishments may provide access to facilities, such as washrooms, laundry rooms, recreation halls and facilities, retail, commercial, and restaurant or food services. Examples may include: Outdoor adventure retreats (with accommodation) • Recreation and wilderness camps • Children's camps, family vacation camps, and outdoor adventure retreats that offer trail riding, white-water rafting, hiking and similar activities 9 Alberta Investor Tax Credit Program | January 2019#10Zoos and Botanical Gardens This industry comprises establishments primarily engaged in constructing and maintaining displays of live plant and animal life for public viewing. Examples may include: Aquariums • Aviaries (bird exhibits) • Botanical gardens • Petting Zoos • Zoos Scenic and sightseeing transportation This industry is comprised of establishments primarily engaged in providing recreational transportation for sightseeing or scenic tours. The establishments often use vintage or specialized transportation equipment and the services provided are local in nature, usually involving same- day return. Examples may include: • Sightseeing or dinner cruises . Steam train excursions • Speed-boat rides Helicopter, glider or hot-air balloon rides Charter fishing services • Aerial cable cars, tramways and gondolas 2. Research, development and commercialization of proprietary technologies This category covers business activities involving research, development and commercialization of proprietary technologies, products and processes. Commercialization is the process of introducing a new product or production method and making it available to the public market. This includes the commercial production of proprietary technologies that are capable of improving the processing and manufacturing of goods and services. This can also include the commercialization of technology platforms, services or processes that can be used in retail or wholesale trade. Some costs associated with exporting the technology can be included for the purpose of calculating the required minimum 50 per cent of engagement in an eligible business activity. 10 10 Alberta Investor Tax Credit Program | January 2019#11This category assumes no technology has been marketed at this stage of the business' development, so the costs to export the proprietary technology developed in Alberta would include: • The operation of a demonstration or prototype facility. Marketing the technology to possible customers outside Alberta. • Attendance at an international trade show. 3. Development of interactive digital media in Alberta This group o of activities is involved with development within Alberta of interactive digital media or video game products intended for commercial use. AITC Regulation 12 (1) (c) defines the following eligibility criteria for the product: • responds to user interactions with moving images, animation, video or audio; and is not one for which public financial support would, in the Minister's opinion, be contrary to public policy. "User interaction" is defined by the repeated steps whereby the product presents information to the user, and to which the user must respond. Eligible products should: • • be intended for experience by the end user on a digital media platform, network or device that is capable of interactivity be intended to educate, inform or entertain the user be suitable for commercial use and/or broad dissemination not be products that are developed for internal use to promote the qualifying corporation, including its products or services not be products that are used primarily for interpersonal communications • not be products that solicit funds Examples of eligible products may include: 11 • Digital games • Mobile applications Educational children's interactive digital media Video game software publishing • Custom design video games Alberta Investor Tax Credit Program | January 2019#12An activity will not be considered eligible if it involves the development of a product that is "contrary to public policy" in the opinion of the Minister. Examples of content that would be considered "contrary to public policy" in the opinion of the Minister include product that: . incites hatred against an identifiable group, or has a dominant characteristic which is the undue exploitation of sex, violence involving one or more crimes, horror, or cruelty. 4. Post-production, visual effects and digital animation Eligible businesses include those that are engaged in producing, distributing, recording, and providing related services such as post-production services, promotion, and exhibition, motion picture processing and developing services. Businesses that provide facilities and technical expertise for recording, and post-production services are also eligible. Digital animation is animation created primarily with the use of digital technology including computer animation hardware and software. Visual effect is commonly used in connection with live action productions or sequences to refer to a special effect which is usually inserted into the production after filming. The effect may be created by digitally augmenting and manipulating visual imagery originating on film, tape and/or digital elements generated in the computer and compositing the modified imagery back onto film or tape. Examples of eligible business activities include the following: 12 Developing and printing of commercial motion picture film • Music studio recording services • Editing motion picture films, video or television tape • • • Visual effects photography, including, but not limited to: O Blue or green screen photography ○ element photography О motion control photography О miniature photography O motion capture sessions and digital scanning and/or surveying of actors, set pieces or entire sets Audio/sound editing and mixing Film, video and tape transfer service Motion picture film, television tape and video processing, editing, titling and sub-titling Music video production • Audio recordings, integrated manufacture, release and distribution • Stock footage, film libraries Tele-production services Alberta Investor Tax Credit Program | January 2019#13Ineligible Business Activities The AITC program does not support the following: 1. Exploration or extraction of minerals or the operation of a mine This category involves the exploration or extraction of oil, gas, bitumen, coal and other minerals or the operation of a mine. A company in this sector may still qualify if it is a small business that is substantially engaged (at least 50 per cent of the company's activities) in research, development and commercialization of proprietary technologies, products and processes. 2. Financial services Financial services such as providing loans, selling insurance or real estate or trading in securities are ineligible business activities under this program. However, the research, development and commercialization of financial services technologies including software and applications that improve the offering of financial services are eligible business activities (at least 50 per cent of the company's activities). An example of eligible financial services includes the development and commercialization of mobile payment applications. 3. Agricultural activities other than non-traditional agricultural activities Traditional agricultural activities such as the cultivation and tillage of the soil, dairy production, cultivation, growing and harvesting of any agricultural or horticultural commodities and raising of livestock, bees, fur-bearing animals or poultry, are ineligible under this program. Activities such as research, development and commercialization of proprietary technologies, products and processes that include the use of specialized small crops, small livestock and small poultry production are eligible (at least 50 per cent of the company's activities). While the development of high technologies that support traditional agricultural activities are eligible, activities that involve the simple purchase and use of high-technology products or services are considered ineligible under this program. High technology enterprises are businesses involved in research and development of proprietary technologies. They offer products or services for agricultural producers based on application of advanced technologies. 13 Alberta Investor Tax Credit Program | January 2019#14Funding There is no minimum investment amount for AITC program applicants to participate in the program. For individual investors: • There is a $60,000 maximum aggregate credit that can be applied per year. The AITC is a refundable tax credit. A rolling maximum credit of $300,000 is available. Each year a maximum of $60,000 can be applied, and unused tax credits may be carried forward for up to four years. Year 1 $1,000,000 Investment Year 2 Year 3 Year 4 Year 5 $0 Investment $0 Investment $0 Investment $0 Investment $300,000 Tax Credit $240,000 Remaining Tax Credit $180,000 Remaining Tax Credit $120,000 Remaining Tax Credit $60,000 Remaining Tax Credit Eligible to use $60,000 Eligible to use $60,000 Eligible to use $60,000 Eligible to use $60,000 Eligible to use $60,000 Carry Forward $240,000 Carry Forward $180,000 Carry Forward $120,000 Carry Forward $60,000 $0 Tax Credit Remaining For corporate investors: . There is no maximum tax credit. • The AITC is a non-refundable tax credit. The tax credit may be carried forward for up to four years. For the EBC: An EBC can raise up to $5 million in direct investments - from corporate and individual investors. Small businesses can raise up to $10 million over a two-year period through VCCs. 14 Alberta Investor Tax Credit Program | January 2019#15Diversity and Inclusion Supplement Starting February 1, 2019, the AITC program will offer an additional 5 per cent tax credit to investors who invest in registered EBCs that meet the diversity and inclusion (D&I) eligibility criteria. To be eligible for the D&I supplement: • The EBC must have three or more directors (i.e. Board of Directors) as defined by the Business Corporations Act. If the Chief Executive Officer is not a director, they will be counted as such for the purposes of the supplement. The majority of the directors (greater than 50 per cent) must be under-represented individuals. This includes the those who identify as a: О female; member of a sexual or gender minority; person of Canadian Indigenous ancestry; person with a long-term or recurring physical or mental disability; or person of visible minority. The EBC must have a diversity and inclusion policy that is approved by its directors. The approved diversity and inclusion policy must be publicly accessible on the EBC's website. This additional tax credit will be available to Alberta investors who make eligible investments after February 1, 2019. For an investment to be eligible for the additional 5 per cent tax credit, investors must invest in an EBC that is registered with the AITC program and meets all the D&I eligibility criteria on the date the investment was made. The implementation of the diversity and inclusion supplement requires changes to the AITC online application portal. These changes are targeted for completion in spring/summer 2019. In the meantime, AITC program staff will approve all eligible tax credit applications for a tax credit certificate valued at 30 per cent. Once the changes to the online application portal are completed, AITC program staff will contact all EBCs with investments made after February 1, 2019, and will determine eligibility for the D&l supplement. If eligible, a separate tax credit certificate will be issued for the 5 per cent supplement amount. The D&I supplement was enabled by the Growth and Diversification Act in an effort to encourage and support diversity in Alberta's small- and medium-sized businesses. 15 Alberta Investor Tax Credit Program | January 2019#16Program Structure and Application Process Step 1: Create a user account through the online application portal Applicants are able to complete their applications through an online portal accessible through the AITC program webpage. Before gaining access to the online application portal, applicants will be prompted to create a user profile. Step 2: Register as an EBC or VCC Business applicants are required to register with the AITC program through one of the following streams: Eligible Business Corporations (EBCs): To register as an EBC, the corporation is required to complete and submit a registration form through the online application portal. Once the requirements are met, a certificate of registration will be provided to the corporation within 30 days of the day of registration. Eligible EBCs cannot request tax credits on behalf of investors until they have successfully registered with the AITC program. At the time of EBC registration, the following documentation will be required: • Financial Statements, or if the registrant cannot provide a financial statement other proof of corporate finances is acceptable. Complete shareholder register (also known as capitalization table or central securities table) detailing all equity share transactions at the share purchase price, including issuances, transfers, redemptions, purchases, sales, exercises, and cancellations. Certification with Disclosure Form, including the name of the corporation and the Corporate Access Number (CAN). This form must be dated and signed by at least one Director and one Officer. In cases where a corporation only has one person on file, this person should date and sign both sections of the certificate. A Business Plan (including description of the business activity related to your application) Venture Capital Corporations (VCCs): Eligible VCCS cannot request tax credits on behalf of investors until they have successfully registered with the AITC program. The corporation is required to complete and submit a registration form through the online application portal. If the eligibility requirements are met, a 16 Alberta Investor Tax Credit Program | January 2019#17certificate of registration will be provided to the corporation within 30 days of the date of registration. Step 3: Apply for Approval to Raise Additional Equity Capital After successful registration with the AITC program, EBCs and VCCs are required to submit applications to raise additional equity capital. Eligible Business Corporations (EBCs): Registered EBCs are required to apply for approval to raise all additional equity capital. Approval will be granted subject to conditions set out in the Investing in a Diversified Alberta Economy Act. Venture Capital Corporations (VCCs): Registered VCCs are automatically approved to raise equity capital up to $50,000 (inclusive of the original $25,000 in equity capital). In order to raise additional equity capital above $50,000 the corporation must apply for approval. Step 4: Raise Equity Capital EBCs and VCCs can solicit investments based on their individual needs. There are two channels of investment for the program. An investor can either invest directly in an EBC, or invest indirectly into a small business through the purchase of equity in a VCC. An investor is required to purchase shares in the EBC and/or VCC in exchange for Canadian currency. The EBC or VCC may not issue debt in exchange for capital from investors. Any investor (including associates and affiliates) must own less than 50 per cent of the voting shares in the corporation. The equity capital raised under the program (either as an EBC or as a business receiving an investment from a VCC) can be used to establish, operate and/or expand an EBC's business. Equity capital raised under the program cannot be used for: 17 • lending • payment of debt • investment outside of Alberta other prohibited uses of funds outlined in Section 13 (VCCS) or 48 (EBCs) of the Investing in a Diversified Alberta Economy Act. Alberta Investor Tax Credit Program | January 2019#18Eligible Business Corporations (EBCs): Debt financing and/or in-kind transactions are not eligible for tax credit; however, shares issued upon the conversion of debt may be eligible if converted at principal amount remaining. Accrued interest is not eligible for tax credit. Venture Capital Corporations (VCCs): VCCs are permitted to use debt to make an investment into an eligible small business if the debt instrument meets the requirements outlined in Section 1(4) of the Regulation. Registered VCCs are required to pay an amount of money equal to 30 per cent of all amounts received as equity capital into an Investment Protection Account (IPA). Once the VCC has made an investment into an eligible small business, or will use the money to make an eligible investment, the Government of Alberta will authorize a proportionate payment out from this IPA. The VCC must make timely investments into an eligible business; it will be required to invest the capital raised within a prescribed period of time. The rules are as follows: • At least 40 per cent of equity capital raised during a VCC's fiscal year must be invested by the end of its first following fiscal year. • At least 80 per cent of equity capital raised during a VCC's fiscal year must be invested by the end of its second following fiscal year. Up to 20 per cent of equity capital raised may be used for administration expenses. Monies must be deposited into an Investment Protection Account (IPA) where the funding and accrued interest can be tracked. Step 5: Apply for Tax Credit Certificates Tax Credit Certificates will be approved on a first-come, first-served basis until the annual budget is fully allocated. The sooner the EBC or VCC raises equity capital, the sooner they can apply to receive approval for the Tax Credit Certificate and ensure allocation from the annual program budget. Each investor will provide their personal and/or corporate information to the EBC or VCC who will then apply for the tax credit certificate on behalf of the investor. The tax credit will then be provided to the EBC or VCC who will provide it to the investor. Registered EBCs and VCCs must request Tax Credit Certificates on behalf of their investors for eligible investments. EBCs and VCCs must collect appropriate information from their investors and use it to complete the Share Purchase Report. The report is accessible through the online 18 Alberta Investor Tax Credit Program | January 2019#19application portal on the AITC program webpage. Once the report is complete, the EBC or VCC will submit it through the online application portal for the issuance of Tax Credit Certificates. As of February 1, 2019, all tax credit requests for eligible investments made in a calendar year must be submitted no later than 90 days following the end of that calendar year. This means that: • Tax credit requests for all investments made into eligible business corporations (EBCs) or venture capital corporations (VCCs) in the 2019 calendar year must be requested by March 31, 2020. Tax credit requests for investments made into EBCs and VCCs in subsequent years must be made by March 31 of the following calendar year. To ensure investments made prior to the introduction of this new deadline are not disrupted, there will be a grace period for investments made in the 2017 and 2018 calendar year: • Tax credit requests for all eligible investments made into EBCs or VCCs in the 2017 or 2018 calendar years must be requested no later than December 31, 2019. Please note: EBCs and VCCs cannot guarantee their investors will receive a tax credit as the Tax Credit Certificates are issued on a first-come first-served basis. Step 6: Delivery of Tax Credit Certificates Once a tax credit has been approved, registered EBCs and VCCs will be able to access and download their investors' Tax Credit Certificates through their online application portal user account. The EBCS and VCCs are responsible for distributing Tax Credit Certificates to their investors. Holding and Reporting Requirements Eligible Business Corporations (EBCs): Shares issued by the EBC for which tax credit was approved must be held (not sold, transferred or redeemed) by the investor for five years from the date of issuance. If the shares are disposed of (sold or transferred) by the investor or redeemed by the EBC prior to this date, the tax credit will be revoked and the tax credit must be re-payed. Registered EBCs must prepare and file an annual report with the Minister of Economic Development and Trade within six months following their fiscal year end. 19 Alberta Investor Tax Credit Program | January 2019#20The annual report form will be available through the online application portal and includes fields for the information outlined below with respect to its most recently ended fiscal year (please see Section 49 of the Investing in a Diversified Alberta Economy Act: a copy of the shareholder register of the eligible business corporation; the copy of the most recent financial statements of the eligible business corporation that have been reviewed by a chartered professional accountant or other person who is a licensed or registered member of an accounting association; and copy of the most recent annual return filed with the Registrar of Corporations. Important note: An EBC must comply with this reporting in each of the five consecutive fiscal years following the date of its most recent issue of shares as part of the raising of additional equity capital. Venture Capital Corporations (VCCS): Shares issued by a VCC must not be redeemed by the VCC for five years from the date of share issuance. If the shares are redeemed prior to this date, the tax credit may be revoked. VCCs must also maintain investments in eligible businesses for a minimum of five years from the date of share issuance, and they must invest the capital raised within a specified period of time, as outlined in Section 4(1) of the Regulation and in this document (see Step 4: Raise Equity Capital). VCCs must submit an annual report for each year they are registered with the program. The annual report form will be available through the online application portal and must include the information outlined below with respect to its most recently ended fiscal year (please see Section 23 of the Regulation): . • the amount of equity capital raised by the venture capital corporation; the aggregate value at cost of investments made by the venture capital corporation, the name of each small business the shares of which the venture capital corporation sold and the value at cost of those shares; the balance held in the investment protection account of the venture capital corporation at the end of the fiscal year; the aggregate amount of expenses incurred by the venture capital corporation and the amount paid as management fees; whether any fees or remuneration were paid to the shareholders, officers or directors of the venture capital corporation or to any associate or affiliate of any of them by a small business in which the venture capital corporation made an eligible investment; 20 20 Alberta Investor Tax Credit Program | January 2019#21• whether the articles of the venture capital corporation were amended in a manner that changed the share structure of the venture capital corporation or altered any rights or restrictions attached to any share of the venture capital corporation; the amount of all dividends received by the venture capital corporation in respect of an eligible investment made by it in a small business; whether the venture capital corporation redeemed any of its shares; whether a share redemption referred to in Section 23 of the Regulation was reported to the Minister; in relation to a share redemption referred to in Section 23h of the Regulation that was not reported to the Minister, the name of each investor whose shares were redeemed, the date of each redemption, the number of shares redeemed in each redemption, the investor's cost of each share redeemed in each redemption and the consideration paid by the venture capital corporation in respect of the redemption; whether the venture capital corporation paid any expenses to any person or group of persons who, at the time the payment was made, directly or indirectly controlled the venture capital corporation; whether the venture capital corporation notified the Minister of the occurrence of any events referred to in Section 17 of the Regulation. Important note: • A VCC must comply with this reporting in each of the five consecutive fiscal years following the date of its most recent issue of shares as part of the raising of additional equity capital. Additional Information Recognition Program participants who wish to make a public announcement about their involvement in the program are asked to notify the Government of Alberta in advance. Program participants are also asked to share the content of their announcement so the Government of Alberta can ensure program details are accurately represented. The Government of Alberta reserves the right to make public announcements on the progress or success of the program, which could include the release of aggregate totals and information. Details on individual investments, including company details, will not be included in Government 21 Alberta Investor Tax Credit Program | January 2019#22of Alberta announcements unless the program participant has granted permission. For additional inquiries or coordination of announcements, please contact the Program Administrator at [email protected]. Freedom of Information and Privacy (FOIP) The Freedom of Information and Protection of Privacy Act (FOIP Act) applies to any information that is provided to the Government of Alberta. This information may be subject to disclosure pursuant to the FOIP Act in response to an access to information request. Information collected by the Government of Alberta is collected in accordance with section 33(c) of the FOIP Act. Information is collected for the purposes of administering and promoting the AITC program; providing companies with information on grants, resources or programs offered by other government ministries or agencies; connection to VCCS registered with the program and for use in research and statistical analysis for Program evaluation. Use and disclosure of personal information is limited by the privacy protection provisions in the FOIP Act. Questions concerning the collection and use of this information should be directed via email to the Program at [email protected]. 22 22 Alberta Investor Tax Credit Program | January 2019