Question of the Week: What are CEDIFs?

Submitted by nsscadmin on Wed, 09/27/2017 - 10:00

The Community Economic and Development Fund (CEDIF) was launched in Nova Scotia in 1999 as a way for Nova Scotian’s to invest in local enterprises. Under the CEDIF program Nova Scotia residents can invest in local enterprises and may receive a tax credit for their investment.

Under the program, Nova Scotia ventures can raise capital through the selling of shares to Nova Scotia residents. The funds raised are placed under the control of a local group of officers and directors. This group is chosen by founders and partners of the CEDIF or by the CEDIF investors at an annual general meeting.

To start a CEDIF the group looking to start the enterprise must prepare and file an Offering Document with the Nova Scotia Securities Commission and apply for an Equity Tax Credit from the Department of Finance. Once the offering document has received a letter of non-objection and a tax credit certificate, they may begin selling shares and advertising to the public in Nova Scotia.

Anyone investing in a CEDIF may receive a 35 per cent non-refundable provincial tax credit for their investment. To qualify the investment in the CEDIF must be held for at least five years. The maximum investment amount eligible for the tax credit is $50,000 and no one investor can hold more than 20 per cent ownership in a single CEDIF.

To date more than 74 companies have been created through the CEDIF process and more than $96 million has been invested by Nova Scotians.

Investors considering an investment in a CEDIF should read the offering document prior to committing funds. The offering document contains the relevant background information about the CEDIF and its officers and directors and the risks about investing in a start-up or small business.

The Nova Scotia Securities Commission does not assess the merits of the CEDIF or its offering document.

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.