The three parameters
Parliament sets three numbers. Everything else is automatic.
All three are legislatively variable
Parameter 1 — FTL Threshold
$100M
Federal tax liability above this amount triggers participation. Approximately 215–275 Canadian corporations qualify per year — representing ~41–42% of all federal corporate tax. Variable by Parliament.
Legislatively variable
Parameter 2 — Surcharge Rate
25%
The fund receives shares equal in value to 25% of the corporation's federal tax liability. Not 25% of income. Of the tax already owed. This rate is variable by Parliament.
Legislatively variable
Parameter 3 — Equity Cap
5%
The fund may not hold more than 5% of any single corporation's equity. When reached, FIFO share sales begin automatically — converting appreciated positions into cash permanently.
Legislatively variable

The government's cash revenue is untouched. Corporate operating cash is untouched. What changes is what Canada owns.

The mechanism
Step by step. From liability to endowment.
No cash. No governance. No board seats.
01
Corporation files T2 return
Federal tax liability calculated. If FTL exceeds $100M, the surcharge is triggered automatically. No separate application. The threshold does the work.
02
Surcharge calculated
25% × FTL = surcharge value. For a corporation with a $500M FTL: surcharge = $125M in non-voting common shares.
03
Shares issued to the CSEEF
New non-voting common shares created and transferred. Price: volume-weighted 30-day average as of filing date. No cash changes hands.
04
Fund holds, earns dividends
Dividends collected quarterly — identical economics to any passive institutional investor. No special class. No priority or subordination.
05
Cap reached — FIFO sales begin
When fund position reaches 5% of a company's equity, oldest shares begin selling automatically. Proceeds flow to the fund's liquidity pool. New shares continue arriving.
06
Buyback condition
Any corporation executing a buyback must redeem 2 fund shares for every 1 open-market share retired. Canada is not the easiest counterparty to buy out. That is the point.
07
Three revenue streams — simultaneously
Dividends — quarterly, automatic. FIFO sales — at the cap, automatic. Unit sales — fund interests to investors, no portfolio churn. No expiry. No renewal.
The objections
The reflex arguments, answered with arithmetic.
Every one of them. Before you ask.
Objection — Nationalisation
Not one voting share. Not one board seat.
Non-voting common shares only — identical to any pension fund or retail investor. No operational control. No governance rights whatsoever.
Objection — Dilution
Half a percent per year. The TSX moves more before lunch.
RBC: 1.429 billion shares. Annual surcharge: ~6.3–8.4M new shares — 0.46–0.60% per year. Canada gets $16.7B in return.
Objection — Cash cost to corporations
Zero. One hundred percent of operating cash retained.
No cash leaves. Liquidity unaffected. Credit ratings unaffected. The corporation issues shares — an accounting entry, not a payment.
Objection — Recession risk
The trough is the opportunity, not the problem.
In 2020 the fund would have acquired 9.5% more equity per surcharge dollar. No redemptions, no career risk, no quarterly reporting. It enters every recovery larger.
Objection — Dividends come from corporate cash
Yes. So does every dividend to every other shareholder.
The surcharge costs the corporation nothing in cash. What the fund earns is the return on a stake Canada should have held all along.
Objection — Legal / constitutional
Share issuance is a normal corporate mechanism. Parliament can require it.
The enabling act establishes the obligation as a condition of operating above the threshold in Canada. It does not seize assets — it creates a new class of obligation on new share issuance.