Budget decisions affecting Capital régional et coopératif Desjardins
"More resources for SMEs and cooperatives over the next three years"
- Luc Ménard, COO of Desjardins Capital
Montréal, March 28, 2018 - "I want to thank the government of Québec for its renewed confidence in Capital régional et coopératif Desjardins. It allows us to continue fulfilling our unique mission to promote economic development for the regions. Over a three-year horizon, $240 million will be made available annually to support the start-up and growth of Québec SMEs and cooperatives. This great news couldn't come at a better time given the potential of our innovative companies and the business transfer issues facing all Quebec communities," said Luc Ménard, Chief Operating Officer of Desjardins Capital, in reaction to the announcements concerning Capital régional et coopératif Desjardins (CRCD) in the Budget Speech delivered yesterday by Minister of Finance Carlos Leitão.
These announcements include the creation of a new class of shares for shareholders who wish to defer their redemption right for seven years to receive an additional tax credit, as well as a three-year plan for future share issues.
An anticipated measure to enhance our regional outreach
The success of CRCD combined with the tax benefit granted to shareholders has meant that they hold on to their shares well beyond the required minimum period of seven years. Over the years, the liquid assets retained by CRCD to repurchase the shares has increased considerably, limiting the amounts available to invest in Québec SMEs.
In order to ensure greater availability of capital for the benefit of local businesses, a new class of shares will be created for shareholders who bought their shares at least seven years ago and who have never requested redemptions. They will be able to commit their redeemable capital for an additional seven-year period in exchange for a provincial tax credit of 10% of the amounts deferred, with no additional capital outlay or immediate tax consequences. The maximum annual volume of shares issued in this new class will be limited to $100 million for three years.
In view of the work required to implement these new provisions, CRCD will take the necessary time to decide on the application terms for shareholders and announce them in a press release.
Benefit of three-year plan
CRCD also has a three-year horizon for its fundraising activities, as the authorized amount has been increased to $140 million per issue, while the tax credit has been set at 35%. Without this decision, CRCD would have been limited in 2018 by its constituting act to issuing an amount equal to the redemptions that occurred during the last issue period, which was some $66 million.
Pre-subscription terms for the 2018 issue
As in previous years, the 2018 issue of CRCD shares will take place in the fall. Pre-subscription will take place through a secure online form which has been used successfully since 2015. Investors with no Internet access may stop by the caisse of their choice for assistance completing the form. Investors are not required to be or to become a member of a Desjardins caisse to subscribe for CRCD shares.
The full subscription terms for the 2018 issue and key dates will be announced at the same time as the publication of the new deferral provisions.
About Capital régional et coopératif Desjardins
With more than 105,000 shareholders, Capital régional et coopératif Desjardins (CRCD) is a public company with $1,945 million in net assets. CRCD contributes to Québec economic development through several levers developed with its manager, Desjardins Capital. These levers, with CRCD as the driving force, form its entrepreneurial ecosystem designed to value and nurture the best of Québec entrepreneurship. Through its network, CRCD supports the growth of 450 businesses, cooperatives and funds in various industries spanning all Québec regions, helping to create and retain more than 67,000 jobs. (www.capitalregional.com)
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