What is a CEDC?
CEDC stands for “Community Economic Development Corporations and Cooperatives.” A CEDC is a small business in New Brunswick that raises funds by selling shares (or other eligible securities) to individuals, corporations or trusts within a defined community to create a pool of money. A local group of officers and directors controls the funds and directs them towards development within their communities.
FCNB and the Department of Finance and Treasury Board offer a joint program for CEDCs that supports economic growth in New Brunswick. The program allows CEDCs to raise capital from New Brunswick investors for economic development within their communities and provides a tax credit to eligible investors of the CEDC. To qualify for the program, a CEDC must be registered under section 14 of the Small Business Investor Tax Credit Act (SBITC Act).
Who can invest in a CEDC?
An eligible investor must be at least 19 years of age and a resident of New Brunswick or be a corporation or trust that has a permanent establishment in New Brunswick. A non-resident investor is not eligible for a tax credit under the SBITC Act.
To sell securities to a non-resident investor, the CEDC must comply with both New Brunswick securities law and the laws of the jurisdiction where that investor resides.
Raising funds as a CEDC
Generally, when a business raises funds from the public, it must provide potential investors with a disclosure document, called a prospectus, or rely on an exemption from the prospectus requirements found in New Brunswick securities law. The CEDC program reduces the regulatory burden on businesses by allowing them to use a tailored offering document rather than a prospectus when raising funds. The offering document incorporates requirements from a local securities rule (i.e. Local Rule 45-509 Community Economic Development Corporations and Cooperatives) that are specific to a CEDC.
Under the SBITC Act, a CEDC must have a minimum of three investors and can raise up to $3 million within a 12-month period. If a minimum of $10,000 is not raised within this time period, all monies must be returned to investors.
To qualify for the program, a CEDC must submit two separate applications: one to FCNB and one to the Department of Finance and Treasury Board; these two applications move forward simultaneously. The application to FCNB determines whether the CEDC will qualify for a prospectus and registration exemption from securities law. If the CEDC meets the qualification criteria, the Executive Director of Securities will issue a letter of non-objection. The application to the Department of Finance and Treasury Board determines whether the CEDC can receive a certificate of registration and whether its investors can obtain a Small Business Investor Tax Credit.
Submitting your application
When submitting the CEDC application to FCNB, you must include the following:
- Filing fee of $350
- Offering Document (i.e., Form 45-509F1)
- Financial statements
- Promotional or marketing materials, if any
- Background checks for directors, officers and promoters
- CEDC’s constating documents
- Consent Form – Collection and Use of Information
Send materials by email to EMF-MD@fcnb.ca. A hard copy, along with the $350 filing fee, must also be sent to the following address:
Executive Director, Securities Division
Financial and Consumer Services Commission
300-85 Charlotte Street
Saint John, New Brunswick, E2L 2J2
The $350 filing fee can be sent by cheque or paid by electronic funds transfer.
The length of the CEDC application process depends on many factors. For instance, there may be a delay if FCNB staff have substantial comments on the initial draft offering document.
FCNB staff will strive to complete our initial review of the materials within 20 business days of receiving the application. Staff are available to assist if the CEDC has questions or concerns. If the CEDC meets all requirements of Local Rule 45-509, the Executive Director of Securities will issue the CEDC a letter of non-objection.
The Department of Finance and Treasury Board application requirements determine if a CEDC project is eligible for the Small Business Investor Tax Credit and can receive a certificate of registration for the program. Visit the Department of Finance and Treasury Board website for more information on the application process.
Once FCNB issues a letter of non-objection and the Department of Finance and Treasury Board has issued a certificate of registration, the CEDC can start raising money.
Preparing a CEDC Offering Document
For more information, see Preparing CEDC Offering Documents: Common Issues and Deficiencies
Promoting a CEDC
If the CEDC complies with Part 5 of Local Rule 45-509, it may inform potential investors that it’s proposing to offer securities. In all cases, the information must be limited to directing the investors to the offering document to obtain relevant information about the distribution.
Before the CEDC has obtained a letter of non-objection from FCNB, a promoter may meet with potential investors to provide them with a general overview of the offering. This may include information on the CEDC, the amount of money they wish to raise, a description of how the CEDC will use the funds, and an outline of the tax requirements. The CEDC may gather the names of potential investors interested in the offering.
Once the CEDC has obtained a letter of non-objection, a promoter may distribute promotional material if it includes the name of the CEDC, the disclaimer as described in Local Rule 45-509, and the approval of a director, officer or promoter of the CEDC.
CEDC Rule and Additional Resources
Reference materials are available to assist CEDCs in navigating the program and preparing their offering document:
Preparing CEDC Offering Documents: Common Issues and Deficiencies
Sample Offering Document – Investment Fund
Sample Offering Document – Non-Investment Fund
Expression of Interest
Consent Form – Collection and Use of Information