Employment and the creation of income earning opportunities for Nunavummiut is an important part of our objective. The Nunavut Development Corporation (NDC) places equity investments in eligible Nunavut business enterprises in order to support employment and income earning opportunities achieved through new business start-ups or the expansion of an existing business.
NDC prioritizes its investing activity on investments that will benefit Nunavut’s smaller communities. Although not exclusive, NDC emphasizes placing equity investments that support Nunavut business enterprises operating in our fishing, tourism, and cultural industry sectors. The Board of Directors is responsible for all decisions with respect to investments. Applicants need to meet NDC’s core qualifying criteria to be considered eligible. Meeting the core qualifying criteria does not guarantee an equity financing proposal will be approved.
Core Qualifying Criteria:Commercial Viability – NDC will invest in Nunavut businesses that demonstrate a reasonable expectation of commercial viability. Employment and Income Earning Potential – NDC will invest in Nunavut businesses that demonstrate strong employment and income earning potential. Emphasis on Smaller Communities – NDC gives preference to investment proposals that benefit business enterprises located in Nunavut’s smaller communities. Minimum Investment Amount of $75,000 – NDC’s minimum investment amount in any Nunavut business enterprise is $75,000; all investments are fully repayable by the investee. Equity-Oriented Investments – NDC’s investments are of an equity-orientated nature (i.e. preferred shares). Co-Investor Participation – NDC only makes investments in business enterprises that involve the co-investment of lenders and shareholders. Sector Investment Focus – NDC emphasizes investments in business enterprises operating in Nunavut’s fishing, tourism and cultural industry sectors.
What is Equity Financing?
After a review of a financing proposal NDC may choose to place an equity investment in a Nunavut business enterprise. In exchange, the business (the investee) agrees to provide NDC with a form of ownership in the business. Usually a share certificate (or some other equity instrument as agreed to between NDC and the investee) is issued, setting out the amount of the investment and the type of equity interest NDC has purchased in the business. The equity investment is supported by a Unanimous Shareholders Agreement and signed by all shareholders in the business. The Unanimous Shareholders Agreement sets out the obligations and responsibilities of the investee to the shareholders of the company.
An NDC equity investment can be a powerful tool supporting the working capital position of a business enterprise.
NDC works with the investee to structure dividend payments to align best with the optimal cash flow cycle of the business. NDC’s shares can be redeemed at any time by the investee without penalty.
Equity investments are typically unsecured, supported by the legal obligations of the investee to the shareholders as established in the Unanimous Shareholder’s Agreement.
NDC equity financing can be an important financing tool that helps lever other forms of investment capital for Nunavut business enterprises looking to grow or expand, including new business start-ups.