The most substantial demands made of labour-sponsored funds have to do with the latter concern about investments made in small and medium-sized companies. For instance, the law usually stipulates that a clear proportion of fund assets (e.g., 60-80 percent) be applied to eligible equity disbursements within a fixed time frame (e.g., one to two years from the moment shares were first bought). The balance of assets are expected to be put into liquid securities (e.g., government securities and bonds) that contribute to diversification of the investment portfolio and provide a ready source of capital for share redemptions by investors at the end of specified shareholding periods (e.g., five years in Ontario, the age of retirement in Québec).
Furthermore, a fund may be confined to investing in industrial activity taking place within a certain set of boundaries, such as a province (e.g., eligible firms in Ontario must have 50 percent of its employees and salaries provincially-based). In most instances, a fund is restricted to special circumstances under which it may assume majority voting shares in a firm. In general, minority control (i.e., less than 50 percent of total voting shares) is the prevailing rule.
Depending on the government jurisdiction, further stipulations may be attached, such as small business financing in certain industries that are oriented towards growth (e.g., high technology) or high value-added employment (e.g., manufacturing and processing). Most funds are also prohibited from entering certain kinds of transactions, such as investment in land development or real estate holdings. In other jurisdictions, such as the federal government and Québec, there exist broad legal parameters for a fund to invest in projects of its choosing.
Statutory frameworks for labour-sponsored funds also include some performance enforcement measures. For example, penalty taxes and charges may be applied to a fund if it fails to meet investment standards and deadlines. Some public authorities can also temporarily suspend or permanently revoke the registered status of a fund. Ceilings on the annual asset growth of funds are also imposed in some jurisdictions; however, these are fiscal measures and are not normally tied to performance.
Interestingly, as a national fund, Working Ventures has the special challenge of responding to non-harmonized standards and regulations on a multi-jurisdictional basis, but without the support of a central securities commission. Currently, the fund is fully operative (i.e., it both accumulates capital and invests) in five provinces where matching tax credits are provided.