PEIPNP Criteria: Partial Ownership Business Stream

printUnder the Partial Ownership Stream, the applicant:

  • Must meet the age, education, work experience, adaptability and language skills necessary to establish and operate a business in Prince Edward Island.
  • Must provide a valid International English Language Testing System (IELTS) test result (obtained within the last 3 years). In order to obtain approval on language ability applicants must achieve a Canadian Language Benchmark Placement Test (CLBPT) equivalent result of CLBPT 5 from their IELTS test.  Applicants below CLBPT 5 will be required to sign a language deposit agreement and make a $20,000 deposit.
  • Must provide a business proposal at time of application and a business plan after the exploratory visit for purchasing partial ownership of a business in Prince Edward Island.
  • Must provide a settlement proposal outlining the intention to move and settle in Prince Edward Island.
  • Must provide evidence of personal net worth of at least $400,000 CAD obtained from legal sources.
  • Must have a minimum of $100,000 CAD unencumbered personal funds to make the required escrow deposit.
  • Must have sufficient unencumbered personal funds to make the required investment, operate the business for a minimum of one year, and settle in Prince Edward Island.
  • Must sign an escrow agreement with the Province of Prince Edward Island and make a $100,000 CAD deposit, which is held in escrow, to be returned without interest once the terms and conditions of the agreement have been met.
  • Must make a minimum investment of $150,000 CAD.
  • Must control not less than 33 1/3% of the equity in the business or make an equity investment in the business of at least $1,000,000 CAD.
  • Must provide active and on-going management of the business from within Prince Edward Island.
  • Must not include a redemption option in the terms of the investment.
  • Must execute an investment agreement outlining the terms and conditions of the applicant’s intent to invest in an eligible Prince Edward Island business.

 

Escrow Agreement

The escrow agreement outlines the terms and conditions that must be met for the refund of the $100,000 CAD deposit.  The terms and conditions are based on the applicant’s intentions as outlined in the business plan for the purchase of at least 33 1/3% of the equity of a business in Prince Edward Island.

The applicant must execute the escrow agreement based on the terms and conditions agreed upon between the applicant and Immigration Services.  Along with this agreement, the applicant must also submit, to Immigration Services, the sum of $100,000 CAD, payable to IIDI, to be held in escrow. The $100,000 CAD will be returned to the applicant, without interest, provided the terms and conditions of the escrow agreement have been met.

Investment Agreement

Should the applicant choose to purchase not less than 33 1/3% of the equity of an eligible Prince Edward Island business, the applicant is required to submit an investment agreement to Immigration Services.  The investment agreement outlines the details of the proposed investment between the applicant and the Prince Edward Island business and must include as a minimum the following information:

  • Confirmation that the Business is not operated primarily for the purpose of deriving investment income such as interest, dividends and/or capital gains;
  • The proposed amount of the Investment in the Business;
  • The number, class and conditions of the shares being purchased (if applicable);
  • Confirmation that the investment does not include a redemption option;
  • Confirmation that the Investment is not less than 33 1/3% of the equity in a Prince Edward Island business or make an equity investment in the business of at least $1,000,000;
  • Confirmation that the Applicant provides or will provide active and ongoing management of the business from within Prince Edward Island; and
  • Timeframes for the Investment.

Priority Sectors

Prince Edward Island will be limiting its nominations to those applicants who are best suited to enhance the Prince Edward Island economy.  Prince Edward Island’s economy relies heavily on its core industries to create economic value.  Accordingly, Prince Edward Island will be giving priority to applications involving;

  • The starting or expanding of an export-oriented business.
  • Businesses that utilize primary sector resources from the following sectors (Agriculture, Fishery and Forestry).
  • Businesses that help economically diversify rural communities in Prince Edward Island.
  • Businesses that develop the province’s emerging innovative sectors: bioscience, information technology, aerospace and renewable energy.

Preference will be given to applications that can demonstrate the ability to increase or maintain employment levels within the business.

Business Criteria

The Business Impact Category considers applications to start or purchase the equity of a business in Prince Edward Island.  In order to be eligible, the business must generate revenue by selling goods and/or services at arm’s length to third parties.  This excludes businesses operated for the primary purpose of deriving investment income, real estate rental operations, loan/investment companies and other non-active investment.

Where professional credentials or licenses to practice are required to establish or operate the business in Prince Edward Island, the applicant will be required to demonstrate, as part of the business plan, that the credentials or licenses required to start or purchase a business, have been met.  For information on foreign credential recognition visit the following websites: http://www.credentials.gc.ca/ and http://www.hrsdc.gc.ca/eng/workplaceskills/credential_recognition/index.shtml

Businesses selling ownership to an applicant of the Business Impact Category must be aware of the terms and conditions of which the investment is being made and ensure the applicable professional advice has been obtained.  Businesses must also sign the Acknowledgement of IRPA Reg. 87 Requirements document which outlines the regulations governing economic investment under immigration.

Immigration Services will consider applications under the Business Impact Category that meet, or will meet, the following business eligibility criteria:

  • The business must be a for-profit corporation incorporated under the Companies Act of Prince Edward Island or the Canada Business Corporations Act and operated for the primary purpose of earning profits from active income through the provision of products/services.
  • The business must be in good standing with the Province on all debts and obligations.
  • The business’ corporate headquarters are located in Prince Edward Island.
  • The business maintains a “permanent establishment” in Prince Edward Island as defined under the Income Tax Act by regulation 400 (2).
  • The business is liable to pay income tax on taxable income earned as a result of a “permanent establishment” in Prince Edward Island, irrespective of income or other taxes which may also be payable in other jurisdictions as a result of income earned or other business activity.
  • The business must have good potential for sustained commercial viability.
  • The business must have assets with a book value of at least $150,000 CAD which are actively used for the business. Businesses will also be considered if they have assets with a fair market value of $ 150,000 CAD as valued by a certified appraiser or have received a valuation for their business from a professional accountant stating a value greater than $ 150,000 CAD.
  • Any business selling a portion of equity to an applicant (i.e., interested in the Partial Ownership Stream) must have also incurred a total of $ 60,000 CAD in wages and/or net income and demonstrate the ability to sustain an applicant’s salary.
  • The business must have the potential to create significant economic benefits to Prince Edward Island by contributing to one or more of the following:
    • Increasing value-added manufacturing, processing or primary resource activity
    • Increasing exports of goods or services
    • Increasing destination tourism, tourism attractions, tourism fixed roof accommodations excluding all new construction and recreational property development
    • Increasing research and development/technology commercialization
    • Increasing technology, skills and specialized know-how to the province
    • Servicing an underserved local or regional market
    • Diversifying retail and restaurant investment
  • No one other than an approved Island agent may represent the applicant in any capacity, to Immigration Services.

Immigration Services reserves the right to limit applications to the Business Impact Category under the various eligible sectors to ensure economic diversity.

Participating Prince Edward Island businesses will be required to sign declaration(s) stating; they acknowledge IRPA Regulations, they will hold the Province harmless, and they have sought professional advice (legal, accounting, tax etc) on the transaction they are entering into.

Prince Edward Island businesses must agree to participate in the evaluation process of the program.  To assist in the monitoring and compliance of the Business Impact Category, the business will be required to report to Immigration Services for a period up to (5) five years.

For the applicant to receive approval, the business must be willing to execute and submit a purchase and sale or investment agreement (if participating in the partial ownership stream).

Ineligible Business

Applications will NOT be considered for the following types of businesses:

  • Bed and breakfasts, hobby farms (see definitions) and home-based businesses
  • Pay day loan, cheque cashing, money changing and cash machine businesses
  • Pawnbrokers
  • Sale of used goods (excluding collectibles, or where the business provides value-added services such as repairs, refurbishing, or recycling)
  • Real estate development/brokerage, insurance brokerage or business brokerage
  • Businesses started for the sole purpose of gaining access to immigrant investment through the program
  • Professional practices
  • Financial services
  • Consulting services
  • Any other type of business that by association would tend to bring the program or the Government of Prince Edward Island into disrepute.
  • An entity that cannot issue shares.

This list of ineligible sectors are meant to serve as an indicator only for those industries either outside of the current scope of the Province’s priorities. Recognizing these priorities may change over time, due to the changing nature of our economic conditions; Immigration Services reserves the right to make additions or deletions to these ineligible sectors.

Start-ups and the formation of incorporated entities

 

  • Start-ups will not be allowed under the Partial Ownership Stream.
  • However, newly incorporated companies created from an existing Prince Edward Island business’ assets will be considered providing;
    • A Prince Edward Island business provides $150,000 CAD in assets to the new company,
    • The new company is a stand-alone business entity without reliance on the original business, and
    • The Prince Edward Island business owner has sufficient expertise in the new company’s area of operation.
  • A business that has historically operated as a sole proprietor or partnership will be considered but will need to incorporate prior to the applicant purchasing equity in their company.  In these instances, businesses should not incorporate until they are certain that the transaction will move forward.

 

Limitation of access

  • Any business, or member of an associated group of companies (see definitions), that has received investment through the Provincial Nominee Program within the past 48 months will not be eligible.
  • Access will be limited to one applicant per group of associated companies.
  • Where related groups of companies (see definitions) exist, eligibility will be limited to one transaction per related group unless each company is determined by Immigration Services to be a stand-alone entity and is not related by way of any material business transactions.

Where there are common shareholders between multiple businesses seeking access to the Business Impact Category, Immigration Services reserves the right to limit access to the PEI PNP if, in the view of Immigration Services, one purpose of the company structure is to access further investors.

Due Diligence

Business Impact Category applicants and potential Prince Edward Island businesses are to obtain accounting/finance, risk assessment, tax, legal or other advice as may be required to exercise due diligence in selecting and investing.  Referrals to a chartered accountant, certified general accountant or tax specialist may be provided through the respective regulatory bodies:

Institute of Chartered Accountants of Prince Edward Island
129 Kent Street, PO Box 301
Charlottetown, Prince Edward Island
Canada CIA 7K7
Tel: (902) 894-4290    Fax: (902) 894-4791
Email: amferris@icapei.com     Website: www.cica.ca or www.icapei.com

Certified General Accountants Prince Edward Island
18 Queen Street
Box # 3, Suite 105
Charlottetown, Prince Edward Island
Canada C1A 4A1
Tel: (902) 368-7237    Fax: (902) 368-3627
Email: contact@cga-pei.org        Website: www.cga-canada.org or www.cga-online.org/pe

CMA Prince Edward Island
Administered by CMA Nova Scotia
Suite 300, 1559 Brunswick Street
Halifax, Nova Scotia
Canada B3J 2G1
Tel: (902) 422-5836  Fax: (902) 423-1605

Law Society of Prince Edward Island
49 Water Street
Charlottetown, Prince Edward Island
Canada CIA 7M4
Tel: (902) 566-1666     Fax: (902) 368-7557
Email: lawsociety@lspei.pe.ca    Website: www.lspei.pe.ca

Community Legal Information Association of Prince Edward Island (CLIA)
1st Floor Sullivan Building, Fitzroy Street
PO Box 1207
Charlottetown, Prince Edward Island
Canada C1A 7M8
Tel: (902) 892-0853    Fax: (902) 368-4096
Email:clia@cliapei.ca         Website: www.cliapei.ca

Declaration

It is important that applicants understand that:

  • The Government of Prince Edward Island and IIDI do not assume any liability whatsoever for the oral or written misrepresentations made by the prospective business, or an agent/representative thereof, which may lead to an applicant subscribing for shares in a Prince Edward Island business;
  • The Government of Prince Edward Island and IIDI do not guarantee, in any way, that the applicant will eventually recover his/her investment or earn dividends or any other return on their investment;
  • The Government of Prince Edward Island and IIDI do not accept any liability whatsoever for the representations, actions, errors or omissions of businesses, agents, or others involved in investment promotion, investment match making, due diligence or other activity which may be associated with the applicant making an investment.