Review of 'Canadian Owned and Controlled' Criteria in Canada Music Fund

Posted on
June 7, 2022

ATTN CIMA Members (Feedback Required): Canada Music Fund Modernization – A Review of the Canadian Owned and Controlled Criteria

The Canadian Heritage department is revising the Canada Music Fund’s (CMF) definition of Canadian-owned-and-controlled. CIMA would like your feedback on the proposed changes outlined below. This feedback is really important and will only take about 5 minutes. Please submit your feedback no later than Monday, June 20 at 5PM ET. Any changes resulting from this process would be effective as of April 2023.

Please review the proposed changes below and then submit your feedback/comments using the link here:

More information about the proposed changes:

The CMF provides upfront financial support to Canadian artists and Canadian-owned-and-controlled companies and organizations to help mitigate the substantial risk in building audiences in a hyper-competitive global environment.

To be eligible for support under the CMF (Individual and Collective Initiatives components), funding must be used to develop the careers of Canadian artists that are supported by Canadian-owned music companies and organizations. To further the CMF’s ongoing program modernization, the MPPD is reviewing the definition of Canadian-owned-and-controlled to ensure that CMF support is directed to Canadian-owned-and-controlled companies and organizations for the development of Canadian artists; and those revenues generated by these companies and organizations return to Canada. The proposed changes would also give Canadian artists that are supported by Canadian-owned companies a greater voice within the music ecosystem.

Proposed Changes (also reflected in the annex here):

The Music Directorate proposes to increase the minimum threshold from 50% +1 to 75% and introduce new elements to strengthen the effectiveness of the CMF’s definition as follows:

1. Increase minimum thresholds to ensure that CMF funding is distributed to Canadian companies that remain substantially Canadian-owned-and-controlled.

o Votes and Voting shares or total value of assets controlled by Canadians: Increase the minimum percentage to at least 75%.

o Administrators (or similar officers) of Boards of Directors of for-profit companies and organizations as well as not-for profit organizations who are Canadian citizens or permanent residents: Increase the minimum percentage to at least 75%, and this criterion would also apply to any sub-group of the Board with decision-making powers (i.e. Executive Committees) that act on behalf of the Board. This includes adding more explicit language to clarify that the term Canadian citizen also includes permanent residents within the meaning of the Immigration and Refugee Protection Act.

2. Introduce new elements to strengthen the Canadian-owned music industry.

For-profit companies and organizations, including Canadian-controlled subsidiaries: 75% of its employees must be based in Canada. Note: The CRA indicates that an employee could carry out their duties in Canada or outside of Canada, as long as the employer treats them as a Canadian employee for tax purposes.

Not-for-profit Boards of Directors: 75% of member seats reserved for individuals representing Canadian-owned companies and organizations, which would also apply to any sub-group of the Board with decision-making powers (i.e. Executive Committees) that act on behalf of the Board.

**Note that these changes only pertain to the CMF’s eligibility criteria which is separate from the Cultural Sector Investment Review and the intervention of the Competition Bureau.

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