Canadian Industrial Renewal Regulations (SOR/81-850)

PART IIIInsurance

General

12 Subject to section 17, the Minister may provide insurance on a loan made by a private lender to

• (a) a business enterprise if the business enterprise requires the loan to restructure its operations in order to improve its position in international trade competition;

• (b) an eligible manufacturer if the eligible manufacturer requires the loan to engage in the manufacture of products that will be subject to international trade competition;

• (c) a designated business if the designated business is about to engage in a manufacturing or processing activity or other commercial activity and will be subject to international trade competition; or

• (d) a person if the person requires a loan to acquire a corporation or group of corporations engaged in an eligible manufacturing or processing activity or located in a designated community and the acquisition will result in a significant increase in manufacturing or processing activities or other commercial activities.

13 Subject to section 17, the Minister may provide insurance on a loan made by a private lender to a business enterprise or a trustee or receiver authorized by law to carry on the activities of the business enterprise if

• (a) the business enterprise is subject to international trade competition;

• (b) the business enterprise is in financial difficulty that threatens the cessation of a significant portion of its operations and the layoff of a significant number of its employees; and

• (c) the business enterprise proposes the sale of all or a significant portion of its assets or the person that holds effective ownership control of the business enterprise proposes the sale of such control and

  • (i) the business enterprise requires a loan to continue its operations until the assets are sold or effective ownership control of the business enterprise is sold, as the case may be,

  • (ii) the sale will be effected within a reasonable period of time, and

  • (iii) the sale will enhance the prospects for the continued employment of a significant number of its employees.

• 14 (1) Subject to subsection (3), the Minister may provide insurance on a loan made by a private lender to a person if the person requires the loan to

  • (a) acquire effective ownership control of a business enterprise;

  • (b) acquire from a business enterprise the whole or a significant portion of the assets of the business enterprise; or

  • (c) restructure its operations as a result of the acquisition by the person of the whole or a significant portion of the assets of a business enterprise.

• (2) Subject to subsection (3), the Minister may provide insurance on a loan made by a private lender to a business enterprise in Canada to restructure its operations if the business enterprise requires the loan to restructure its operations as a result of the acquisition of its effective ownership control by a person.

• (3) The Minister may provide insurance pursuant to subsection (1) or (2) on the following conditions:

  • (a) the person referred to in subsection (1) or the business enterprise referred to in subsection (2) that requires a loan has agreed

    • (i) to provide or to cause to be provided to the private lender an appropriate guarantee for 10 per cent of the amount of the loan to be provided, and

    • (ii) to provide the private lender with appropriate security on the assets acquired or on the assets of the corporation the effective ownership control of which has been acquired; and

  • (b) the acquisition or restructuring in respect of which the loan is required

    • (i) is essential to prevent a serious disruption in the activity of the corporation acquired or the activity resulting from the use of the assets acquired,

    • (ii) will result in the growth, efficiency or international competitiveness of a manufacturing or processing activity or other commercial activity in Canada,

    • (iii) would not proceed unless the loan required is insured by the Minister, and

    • (iv) would not proceed unless the Minister and the private lender agree to limit the liability of the person referred to in subsection (1) or the business enterprise referred to in subsection (2) to the lender to 10 per cent of the amount of the loan to be provided.

15 Subject to section 17, the Minister may provide insurance on a loan made by a private lender to a person engaged or about to engage in a business in Canada that provides services, directly or indirectly, to a business enterprise in Canada that is engaged in international trade competition if that person requires the loan to establish, restructure or improve its operations in order to improve the position of the business enterprise in international trade competition.

16 Subject to section 17, where a person or a trustee or receiver authorized by law to carry on the activities of that person has previously obtained assistance by way of a loan or insurance on a loan made or authorized under these Regulations, the Minister may provide insurance on a loan to that person, trustee or receiver for the purpose of protecting the Crown’s interest in respect of the loan previously made or insured.

Condition of Insurance

17 The Minister shall grant insurance pursuant to sections 12, 13, 15 and 16 only where the business enterprise or person referred to in those sections that requires the loan is unable to obtain sufficient financing on reasonable terms unless the loan is insured by the Minister.

Amount of Insurance

18 Insurance provided by the Minister pursuant to

• (a) section 12, 14 or 15 shall not exceed 90 per cent, or

• (b) section 13 or 16 shall not exceed 100 per cent

of the amount of the loan in respect of which it is provided.

Application for Insurance

19 A private lender who wishes the Minister to provide insurance on a loan in accordance with these Regulations shall apply therefor to the Minister and shall provide such information as may be necessary to process the application.

Reduction of Insurance and Insurance Fee

• 20 (1) The amount of any insurance provided by the Minister pursuant to these Regulations may be reduced at the request of the private lender at such times and in such manner as may be agreed to by the Minister.

• (2) The insurance fee payable by a private lender shall be 1 per cent per annum of the amount of insurance in force from time to time and shall be paid in advance to the Minister in semi-annual installments.

• (3) Notwithstanding subsection (2), the Minister may, in respect of insurance provided pursuant to section 13, 14 or 16, waive or reduce the amount and vary the terms of payment of the insurance fee accordingly.

• (4) If the amount of a loan made by a private lender is advanced in periodic advances, the Minister may, if required by the private lender, provide insurance pursuant to these Regulations on such advances.

Payment of Insurance

21 Where a private lender has demanded repayment of a loan in respect of which insurance has been provided pursuant to these Regulations, the amount payable to the private lender shall not exceed the lesser of

• (a) the amount of insurance in effect on the date of such demand; and

• (b) in the case of

  • (i) a loan insured pursuant to section 12 or 15, 90 per cent of the loss incurred by the private lender, and

  • (ii) a loan insured pursuant to section 13 or 16, 100 per cent of the loss incurred by the private lender.

22 Notwithstanding section 21, where a private lender has demanded repayment of a loan in respect of which insurance has been provided by the Minister pursuant to section 14, the amount payable to the private lender shall not exceed the lesser of

• (a) the amount of insurance in effect on the date of such demand; and

• (b) 90 per cent of the loss incurred by the private lender excluding any amount recovered or recoverable under the guarantee obtained by the private lender in accordance with subparagraph 14(3)(a)(i).

PART IVContributions

23 The Minister shall administer contributions in accordance with the provisions of this Part.

24 The Minister may make contributions to a business enterprise in respect of any of the following:

• (a) the costs of engaging the services of a qualified consultant to develop a proposal to qualify for a loan or loan insurance under these Regulations or contributions under paragraph (c) or (d);

• (b) the costs of engaging the services of a qualified consultant to identify new or improved products or to conduct product testing or market testing on such products;

• (c) the costs of development and design of a new or improved and technologically advanced product, process or service capability that offers good prospects for commercial exploitation and benefit to Canada, which development and design are scientifically and technically feasible but represent technical risk;

• (d) the costs of a project for the design of a new mass-produced durable product through an expansion of the industrial design program of the business enterprise where the industrial design activity is directed by a qualified industrial designer;

• (e) the costs of engaging the services of a qualified consultant to develop a market strategy or market feasibility study to exploit a project in respect of which a loan, loan insurance or contribution was made or authorized by the Minister under these Regulations;

• (f) the costs of engaging the services of a qualified consultant to undertake a study to determine the feasibility of implementing plans for a project to significantly enhance the productivity or efficiency of the project where

  • (i) the enhancement project involves a significant departure from the traditional productivity or efficiency practices of the business enterprise and only involves the existing available technology, and

  • (ii) there exists a potential for significant productivity or efficiency gains and a demonstrable uncertainty as to the benefits of the enhancement project; and

• (g) the costs of engaging the services of a qualified consultant to protect Her Majesty’s interest in respect of any loan, insurance or a contribution made by the Minister pursuant to these Regulations.

• 25 (1) Contributions made under section 24 shall be in an amount that is considered necessary to induce a business enterprise to undertake any of the matters described in that section without incurring significant economic hardship for the business enterprise.

• (2) Notwithstanding subsection (1), contributions made in respect of

  • (a) any of the matters described in paragraphs 24(a) to (f) shall not exceed 75 per cent of its costs to the business enterprise; and

  • (b) an interest described in paragraph 24(g) shall not exceed 100 per cent of its costs to the business enterprise.

• (3) Where the Minister makes a contribution to a business enterprise in respect of the costs referred to in paragraph 24(b), the business enterprise shall pay to Her Majesty a royalty of up to 5 per cent of the amount of any export sales of a new or improved product referred to in that paragraph, except that

  • (a) the aggregate of royalties shall not exceed the amount of the contribution; and

  • (b) no royalties are required to be paid in respect of sales made more than five years from the day the contribution is made to the business enterprise.

26 Notwithstanding section 24, the Minister may make contributions to a business enterprise pursuant to that section in respect of a project only where,

• (a) the project and the exploitation of the results thereof represent a significant burden in respect of the resources of the business enterprise; or

• (b) the project would not be undertaken in Canada without a contribution by the Minister and the project and the exploitation of the results thereof offer significant benefit to Canada.