What is the purpose of the BC Discovery Fund?
BCDF was created to provide early-stage companies in the technology sector
in British Columbia with a source of patient equity capital for the growth
and expansion of their businesses and to provide British Columbia investors
with an experienced and proven management team capable of maximizing shareholder
returns from these investments.
What is the BC Discovery Fund?
BC Discovery Fund is registered as a venture capital corporation (“VCC”)
under the Small Business Venture Capital Act (the “SBVCA”).
Under the SBVCA, VCCs such as BCDF are established to make investments
in Eligible Small Businesses in accordance with the provisions of the
SBVCA, and to provide business and managerial advice to the Eligible Small
Businesses in which they make investments. The SBVCA also regulates the
kind of Eligible Small Businesses in which a VCC can invest.
When did the Fund start and how long has the manager been doing
The Fund was launched in November 2002 and started raising funds
by prospectus in March of 2003. The founding managers of Discovery
Capital have been managing VCC funds in BC for over 20 years.
Does the Fund only invest in private companies?
The Fund is not restricted to investing only in private companies. It
can invest in public companies providing that it purchases treasury shares
– the Fund cannot acquire shares in the open market.
If I dispose of shares of the Fund at a loss, do I realize a capital loss?
A redemption of a share is treated as a disposition for proceeds equal to the redemption price paid by the Fund. Generally, an investor will realize a capital loss if the proceeds of disposition of shares of the Fund are less than the investor’s adjusted cost base of those shares and all reasonable costs of disposition. However, any capital loss that arises must be reduced by the amount of tax credits received in respect of the shares. A simple example – if an individual purchased shares at a price of $10.00 per share, held them for the minimum five years required by the Fund, and redeemed them at a price of $8.50 per share, the $1.50 per share capital loss is reduced (in this case, eliminated) due to the $3 tax credit received when the shares were originally purchased. If a capital loss is realized by an RRSP or RRIF, the amount of any capital loss may not be deducted by the annuitant of the plan.
Refer to Income Tax Considerations in the Fund's prospectus and consult your own tax advisor.