Stewart McKelvey

regimes in these four provinces particularly rel- evant to angel investors and the businesses in which they invest. Corporate Law Each of Atlantic Provinces has its own corpor- ate statute: the Companies Act (Nova Scotia); the Business Corporations Act (New Brunswick); the Corporations Act (Newfoundland and Labrador) and the Companies Act (Prince Edward Island). While the New Brunswick and Newfoundland and Labrador corporate statutes are based on the same model as the Canada Business Corporations Act, each statute has differences of which investors should be aware when making their in- vestment decisions. To highlight a few note- worthy variations: The Business Corporations Act (New Brunswick) pro- vides for cumulative voting for all elections of directors, and unless otherwise specifi ed in the constating documents, shareholders are entitled to statutory pre-emptive rights with respect to future share issuances. New Brunswick has no residency requirement for directors and permits other " mous shareholder agreements. However, notice of the execution of a unanimous shareholder agree- ment must be fi led with the registrar in Newfound- land and Labrador. In Prince Edward Island, the shareholder list is a matter of public record. Each of the Atlantic familiar elements such as unanimous shareholder agreements. Unlike the other three Atlantic Canadian stat- " provinces offers tax credits to angels' resident and investing in growing businesses within each province. Tax incentives Each of the Atlantic provinces offers tax credits to angels' resident and investing in growing busi- nesses within each province. Angels should ensure that their investee companies receive pre-approval of eligibility before investing. In New Brunswick, the applicable tax credit is the Small Business Investor Tax Credit Program. This non- refundable credit is calculated as 30 per cent of the invest- ment with a maximum annual credit of $75,000. It can be carried back for three years and forward for seven years. Angels that are resident in Nova Scotia may benefi t from the non-refundable Equity Tax Credit through investments in eligible businesses. This credit is calculated at a rate of 35 per cent of the investment with a maximum annual credit of $17,500 and can be car- ried back for three years and utes, Nova Scotia's Companies Act has little statu- tory prescription as to the content of its constating documents or default rules, leaving many common corporate governance matters to be governed by the articles or by common law. For example, there is no statutory directors' liability. Nova Scotia also does not recognize unanimous shareholders' agree- ments, although the same results can generally be achieved through the publicly fi led articles. How- ever, Nova Scotia is unusual in allowing companies to hold their own shares or shares in their parent, and allows the issuance of partly paid shares, each of which can be an advantage in some transactions. Nova Scotia has no director residency require- ments. The Newfoundland and Labrador statute is close to the CBCA including providing for unani- forward for seven years. The Share Purchase Tax Credit in Prince Edward Island provides a rebate of provincial personal income tax. The rebate is calculated at a rate of 35 per cent of their eligible investment; the maximum rebate is $35,000. Newfoundland and Labrador has the Direct Equity Tax Credit Program, which provides a non- refundable credit that can be carried forward seven years or back three years. There are different rates depending on where an investment is made in the province. If an angel invests in the North East Ava- lon region, the credit is calculated at 20 per cent of the investment to a maximum rate of $50,000; if an eligible investment is made anywhere else in the province, the rate increases to 35 per cent. The federal government encourages invest- ment in Atlantic Canada by providing tax credits through the federal Income Tax Act. Investors that purchase qualifying property for use in Atlantic Canada can earn credits at a rate of 10 per cent DOING BUSINESS IN ATLANTIC CANADA WINTER 2012 7

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