Canada Alert: Quebec cancels 'lucky draw' for investors
A major reshuffle of the highly anticipated Investors Programme of the Canadian province of Quebec is in the making and is soon to be announced, according to one expert.
The changes are expected to lead to a bigger time frame for applications, but may mean more pressure on applicants to submit the correct documentation.
The plan has been budgeted by the Quebec Government and partners have been appointed, but the changes are yet to be announced, says Armand Arton, president and CEO, Arton Capital.
He claims that the changes will turn around the current programme dramatically. The pressure on the applicant to submit a perfect file within a two-week window to be eligible for a draw amongst 5,000 other applicants will be reduced, he explains.
Currently the Quebec Government accepts a limited number of applications during short interval periods. The next such period has been set for September 8-19 this year, and the number of applications to be accepted has been capped at 1,750.
Although the intake cap remains, this selection will now be preceded by a pre-selection, executed by 14 financial intermediates around the world, explains Arton.
“The government of Quebec has already decided to cancel the ‘lucky draw’ as selection process of the target of 1,750 application worldwide and will introduce a quota per financial Intermediary.”
“Each of the 14 intermediates will be allocated a quota of applications that [they] will be able to submit. It will be up to [the intermediaries] to select only the best applications and submit them to the Quebec Government.”
Thus, although the final decision is still in the hands of the Quebec Government, the pre-selection has now been allocated and applications will have to be qualified for submission to the government.
“Whereas a successful application was previously based on a lucky draw in a pool of good and bad files, the quality of the file has now become a determining factor,” says Arton.
What is in a good file?
In principle, the requirements of the application for the Investors Program have not changed.
As a first, the applicant must have, alone or with his accompanying spouse, a net asset worth of at least CAD1,600,000.
An agreement must be signed to invest CAD800,000 with a financial intermediary authorised to participate in the Investor Program, and the applicant must have management experience in a legal farming, commercial or industrial business, or in a legal professional business.
“These requirements remain the same, but the emphasis is now on providing the complete documentation,” says Arton.
“Previously, a file would, maybe, have 10 per cent of the documentation required. This led to an acceptance rate of 1 out of 3. It is expected that this rate will be raised to 80 per cent with the new system in place.”
As the financial intermediates will be tasked with the pre-evaluation of the files and certification of the source of funds, companies will deploy several techniques to assure a successful application.
“We will retain the services of professional diligence companies doing a background check of the applicant, with the aim to evaluate their financial and criminal diligence before we accept a file. This may be an extra cost for us, but it will lead to a higher success rate of the application,” explained Arton.
“A person with a complete history of the documentation to support the application will have a better chance to be selected,” he added.
Although not confirmed, the applicant will probably have 5 months from official reopening of the Quebec Program to submit the file for evaluation by the financial intermediate, said Arton. This will be a significant extension compared to the previous two-week intervals.
“The opening of the 2014 admission campaign has been postponed. Most probably the program will be opened in October 2014 and will remain active until February 2015.
“The standards will be much higher, but applicants will have a much longer preparation time,” he noted.
On average, an applicant takes 1-2 months to complete a good file, believes Arton.
It is noteworthy that the quota rules do not apply to applicants who speak a high-intermediate level of French. These applicants can submit their application at any time up to March 31, 2015.
The 1,200 quota per country will remain in place, adds Arton.
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