Ottawa is imposing strict rules on large companies that take government money during the COVID-19 pandemic, including limits on executive pay, dividends and share buybacks.
On Monday, the federal government unveiled a loan program for large firms that have been harmed by COVID-19 and the subsequent lockdown that are not able to get financing by conventional means.
Known as the "Large Employer Emergency Financing Facility," the federal program is for companies and non-profit organizations with annual revenue of $300 million or more. Firms in all sectors can apply for the funding except in the finance industry. Companies that receive money will have to accept limits on executive pay, dividends and share buybacks.
The government money is meant to limit a wave of bankruptcies and defaults, the government said in a statement. Companies accessing the fund, including those in the oil and gas sector, will be required to publish financial disclosures annually on climate change and how their business fits in with the government’s sustainability objectives. There will also be limits on dividends, buybacks and executive pay.
Of 1.1 million Canadian businesses, at least 3,000 have annual revenue of more than $300 million, according to the Canadian Chamber of Commerce. The federal government also announced the expansion of an earlier plan, the Business Credit Availability Program, for mid-sized companies which will now provide loans of as much as $60 million and guarantees of as much as $80 million.
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