In response, the Quebec Federation of Labour proposed a Solidarity Fund at a provincial economic summit conference in 1982 to help the province create a locally controlled healthy and sustainable economy.
But it wasn't until the late 1990s that LSVCCs became truly noteworthy outside Quebec, thanks in equal part to generous tax breaks from federal and provincial governments and attractive returns to investors.
The emergence of the LSVCC industry stems from the idea that the growth of these firms will stimulate the Canadian economy and create jobs.
[2] Prior to 2015, the federal government had offered investors in LSVCCs a 15% tax credit on a maximum investment amount of $5,000 per year – worth up to $750.
They will also negotiate to have members of their portfolio management team hold positions on the board of directors of companies they invest in.
LSVCC funds have holding periods because of the time it takes for these small companies to meet the criteria necessary for one of the above-mentioned options.
The primary objective of LSVCC fund managers is to obtain a superior rate of return through an eventual and timely disposition of each investment.
[4] Additionally, some government funds have been alleged to compete with private investment, potentially affecting the development of new companies in areas where they operate.