That Quebec city and Ottawa help our struggling businesses through the present economic crisis, it is justifiable in this period of war against the COVID-19. But it is necessary that the recipient firms use the public funds wisely.
Let’s say our governments inject billions of dollars in companies listed on the Stock market who are the hardest hit by the paralysis of their commercial and industrial activities.
In order to avoid becoming the turkey of the stuffing, it should be a lot of restrictive conditions to the beneficiary companies of ” our “generous” government. We must not lose sight of the fact that public funds paid into the coffers of companies come from the pockets of taxpayers.
10 conditions for the help
1. The company recipient of aid from the government should not use tax havens within the framework of its business activities, either directly or through subsidiaries located in these jurisdictions to tax light, or indirectly through commercial allies based in such tax havens. This is not because the Caisse de dépôt et placement du Québec fathom it-even business with companies located in tax havens that Quebec and Ottawa should accept to help the companies followers of tax havens.
2. If the government assistance takes the form of a grant, it would be necessary that, in return, the company gives the government a stake in its share capital, that is to say, a block of shares proportional to the amount injected. Thus, when the crisis is over and that the company is a beneficiary recovers in a stock Exchange, we, the taxpayers, can also benefit from a “return” on our collective investment. If the company fails to rectify, so much the worse for us, it is the issue of risk capital.
3. It is necessary that the senior management of the company greatly reduces his compensation during a year, or more, if the return to normal of its activities is deferred in time. How much ? 25% to 50%, depending on the size of the compensation of the officers concerned !
4. The companies are victims of the present financial crisis should suspend the dividends (if any) they pay to their shareholders from the moment they receive the financial aid from the State. It would really be unwise to use government assistance to pay a portion to the shareholders of the company.
5. Any company on the stock Exchange which receives government assistance in the framework of this pandemic, the sars coronavirus would have to suspend its program of repurchase of its own shares on the stock Exchange, and this, during the entire period until the return to the normal activities of the company until the recovery of its financial balance sheet. It would be scandalous to see a company use the money to governments to buy back its shares on the stock Exchange in order to support the value of the title.
6. The companies receiving wage subsidies (up to 847 $ per week per employee) offered by the Trudeau government should demand of their leaders that they put a cap on them as their compensation during the three months covered by this government grant. The same salary cap for all the world, without exception, for the duration of the exceptional assistance to private enterprise !
7. The aid granted in this period of financial crisis should be primarily used as a support to the survival of the canadian operations of the company. Of course, I do not speak here of government assistance programs specific for canadian companies exporting and the development of foreign markets.
8. Companies must commit to producing a report on the expenditures that will be made with the government support, which will simplify the work of financial audit that will be the officials of those government assistance programs for businesses.
9. The leaders of the beneficiary company undertake to remain accountable for the use of public funds obtained for a minimum period of five years, and this, even if they were to leave the company. Such a measure will put a healthy pressure on the proper use of government assistance.
10. The advances of public funds (such as loans) should be included in the priority claims of the beneficiary companies, that is to say, to be secured by assets, so to be redeemed prior to any other debt, when a company is in payment default. This does obviously not the portion of public funds that are invested in the capital stock of a company.
Yes ! to financial assistance to businesses, but without being fool.