Requirements for the Set-Aside Program for Aboriginal Business

Who is Eligible?

An Aboriginal business, which can be:

• a band as defined by the Indian Act
• a sole proprietorship
or

• a limited company
• a co-operative
• a partnership
• a not-for-profit organization

in which Aboriginal persons have at least 51 percent ownership and control,

or

• A joint venture consisting of two or more Aboriginal businesses or an Aboriginal business and a non-Aboriginal business(es), provided that the Aboriginal business(es) has at least 51 percent ownership and control of the joint venture.

When an Aboriginal business has six or more full-time employees, at least 33 percent of them must be Aboriginal persons, and this ratio must be maintained throughout the duration of any contract awarded on the basis of the contractor being an Aboriginal business.

Bidders will be required to certify in their bids that they are an Aboriginal business or a joint venture constituted as described above.

Who is An Aboriginal Person for Purposes of the Set-Aside Program for Aboriginal Business?

An Aboriginal person is an Indian, Metis or Inuit who is ordinarily resident in Canada.

Evidence of being an Aboriginal person will consist of such proof as:

• Indian registration in Canada
• membership in an affiliate of the Metis National Council or the Congress of Aboriginal Peoples, or other recognized Aboriginal organizations in Canada
• acceptance as an Aboriginal person by an established Aboriginal community in Canada
• enrolment or entitlement to be enrolled pursuant to a comprehensive land claim agreement, or membership or entitlement to membership in a group with an accepted comprehensive claim.

Evidence of being resident in Canada includes a provincial or territorial driver's licence, a lease or other appropriate document.

For further information on the Set-Aside Program for Aboriginal Business, contact:

Economic Development and Procurement Directorate

Indian and Northern Affairs Canada
Tel.: (819) 997-8383 or (819) 997-8746
Fax: (819) 994-0445.

Evidence of Ownership and Control

Factors that may be considered in determining whether Aboriginal persons have at least 51% ownership and control of an Aboriginal business include:

• Capital Stock and Equity Accounts, i.e., preferred stock, convertible securities, classes of common stock, warrants, options
• Dividend policy and payments
• Existence of Stock Options to employees
• Different treatment of Equity transactions for Corporations, Partnerships, Joint Ventures, Community organizations, Cooperatives, etc.
• Examination of Charter Documents, i.e., corporate charter, partnership agreement,financial structure;
• Concentration of ownership or managerial control in partners, stockholders, officers, trustees and directors based on a definition of duties
• Principal occupations and employer of the officers and directors to determine who they represent, i.e. banker, vested ownerships
• Minutes of directors meetings and stockholders meetings for significant decisions that affect operations and direction
• Executive and employee compensation records for indication of level of efforts associated with position
• Nature of the business in comparison with the type of contract being negotiated
• Cash management practices, i.e., payment of dividends - preferred dividends in arrears
• Tax returns to identify ownership and business history
• Goodwill contribution/contributed asset valuation to examine and ascertain the fair market value of non cash capital contributions
• Contracts with owners, officers and employees to be fair and reasonable
• Stockholder authority, i.e. appointments of officers, directors, auditors
• Trust agreements made between parties to influence ownership and control decisions
• Partnership - allocation and distribution of net income, i.e., provision for salaries, interest on capital and distribution share ratios
• Litigation proceedings over ownership
• Transfer pricing from non-Aboriginal joint venturer
• Payment of management or administrative fees
• Guarantees made by the Aboriginal business
• Collateral agreements.

Want more information on the Set-Aside Program for Aboriginal business? Visit the Indian and Northern Affairs website.