Income Tax Regulations — 6202
6202 (1) For the purposes of paragraph 66(15)(d.1) and subparagraphs 66.1(6)(a)(v), 66.2(5)(a)(v) and 66.4(5)(a)(iii) of the Act, a share of a class of the capital stock of a corporation (in this section referred to as the “issuing corporation”) is a prescribed share if it was issued after December 31, 1982 and (a) the issuing corporation, any person related to the issuing corporation or of whom the issuing corporation has effective management or control or any partnership or trust of which the issuing corporation or a person related thereto is a member or beneficiary (each of which is referred to in this section as a “member of the related issuing group”) is or may be required to redeem, acquire or cancel, in whole or in part, the share or to reduce its paid-up capital at any time within five years from the date of its issue, (b) a member of the related issuing group provides or may be required to provide any form of guarantee, security or similar indemnity with respect to the share (other than a guarantee, security or similar indemnity with respect to any amount of assistance or benefit from a government, municipality or other public authority in Canada or with respect to eligibility for such assistance or benefit) that could take effect within five years from the date of its issue, (c) the share (referred to in this section as the “convertible share”) is convertible under its terms or conditions at any time within five years from the date of its issue directly or indirectly into debt, or into a share (referred to in this section as the “acquired share”) that is, or if issued would be, a prescribed share, (d) immediately after the share was issued, the person to whom the share was issued or a person related to the person to whom the share was issued (either alone or together with a related person, a related group of persons of which he is a member or a partnership or trust of which he is a member or beneficiary) controls directly or indirectly, or has an absolute or contingent right to control directly or indirectly or to acquire direct or indirect control of, the issuing corporation and the issuing corporation has the right under the terms and conditions in respect of which the share was issued to redeem, purchase or otherwise acquire the share within five years from the date of its issue, (e) at the time the share was issued, the existence of the issuing corporation was, or there was an arrangement (other than an amalgamation within the meaning assigned by subsection 87(1) of the Act) under which the existence of the issuing corporation could be, limited to a period that ends within five years from the date of its issue, or (f) the terms or conditions of the share (referred to in this paragraph as the “first share”) or of an agreement in existence at the time of its issue provide that a share (referred to in this section as the “substituted share”) that is, or if issued would be, a prescribed share may be substituted or exchanged for the first share within five years from the date of issue of the first share, but does not include a share of the capital stock of a corporation (g) that was issued after December 31, 1982 pursuant to an agreement or offering in writing made on or before December 31, 1982 or in accordance with a prospectus, registration statement or similar document that was filed with and, where required by law, accepted for filing by, a public authority in Canada pursuant to and in accordance with the laws of Canada or of any province on or before December 31, 1982, (h) that would be a prescribed share solely by virtue of one or more of the terms or conditions of an agreement if such terms or conditions are not effective or exercisable until the death, disability or bankruptcy of the person to whom the share is issued, (i) that is (i) convertible under its terms into one or more shares of a class of the capital stock of the corporation for no consideration other than the share or shares, (ii) described in par