Issues
Capacity at the NS Securities Commission (NSSC)
There were twelve applications at the NSSC for Funds looking to sell into the 2003 RRSP season. The Commission is not staffed to handle this level of activity leading to delays that will mean that some Funds will not be approved in time for the 2003 RRSP season, and nearly all projects will be approved at such a late date that selling time will be seriously limited (Funds will not have the full 60 days to sell shares. Alternatives for addressing this include:
- Increase resources at the Securities Commission.
- Encourage funds to submit applications earlier.
- Insure projects are fully evolved and applications complete prior to submission to Securities so that they do not have to deal with basic issues of the offering. The best way to achieve this is for OED to work closely with potential CEDIF groups in the development of the CED plan.
Support for Existing Funds
The CEDIF was intended to create self-managing local funds. Government was to play a limited role in the establishment and operations of these funds. However, developments this year indicate that the funds may require a higher level of on going support. There have been cases were funds have made ineligible investments, have failed to complete proper reporting, or have otherwise not fully complied with legislation. Many of these issues can be addressed through the preparation of written material for CEDIF boards.
Department of Finance Review of ETC Act
The Equity Tax Credit Act has been extended and is now set to expire December 31, 2006, pending a further extension. The Department of Finance regularly reviews all tax credit programs to determine the economic impacts of these programs.
Investment Dealers Association Objections to CEDIFs
While the IDA has not been vocal in its objections to the CEDIF program over the past year, their lack of support seriously undermines the ability of the program to grow and makes it difficult for small investors to invest efficiently.
RRSP Related Issues
Several options are being explored to make it easier for larger trust companies to deal with CEDIF shares. This includes obtaining electronic security numbers for shares. Currently, efforts are underway to obtain a branded RRSP from Cooperative Trust under the Provincial banner that would significantly reduce cost per trust charges.
Directors Liability Insurance
To date, the funds have been able to access liability insurance at reasonable rates. Given recent developments in the insurance and investment industries, however, it is possible that funds may experience dramatic changes in rates.
Ability to Attract and Retain Qualified CEDIF Boards
Steps should be taken to provide better ongoing support for boards and to provide better guides to the CEDIF program designed for new or prospective board members. Given that these are volunteer boards, it is important that government work to alleviate as many roadblocks as possible. In addition, printed guides for potential and existing boards (need a Guide for CEDIF directors) would be helpful in explaining rules and expectations of board members;
Conclusion
The past few years have demonstrated that there is a keen desire on the part of Nova Scotia communities, businesses, and investors to be involved in Community Economic Development Investment Funds. There have been many successes, however, there are significant challenges to integrating community investment into the Canadian securities industry. The challenge over the long term will be to maintain the momentum while these issues are addressed.
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Persons involved with the management of a fund should know the following:
ETC Regulations
• Dept. of Justice
Investment Pacing
• Dept. of Finance
• NSSC - TBA
 | CEDIF Information Sheet
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