Income Tax Regulations — 5100
s not secured in any manner whatever), or (ii) not secured in any manner whatever, other than a debt obligation that (iii) where the debt obligation specifies an invariant rate of interest, has an effective annual rate of return that exceeds the designated rate for the day on which the obligation was issued, and (iv) in any other case, may have an effective annual rate of return at a particular time that exceeds the designated rate at the particular time, (c) an option or right granted by an eligible corporation in conjunction with the issue of a share or debt obligation that qualifies as a small business security to acquire a share of the capital stock of the corporation, or (d) an option or right granted for no consideration by an eligible corporation to a holder of a share that qualifies as a small business security to acquire a share of the capital stock of the corporation if, immediately after the time of acquisition thereof, (e) the aggregate of the cost amounts to the person of all shares, options, rights and debt obligations of the eligible corporation and all corporations associated therewith held by the person does not exceed $10,000,000, and (f) the total assets (determined in accordance with generally accepted accounting principles, on a consolidated or combined basis, where applicable) of the eligible corporation and all corporations associated with it do not exceed $50,000,000 and includes (g) property of the person that is, at that time, (i) a qualifying obligation, or (ii) [Repealed, SOR/2005-264, s. 10] (iii) a security (in this subparagraph referred to as the “new security”) described in any of paragraphs (a) to (d), where the new security was issued at a particular time (A) in exchange for, on the conversion of, or in respect of rights pertaining to a security (in this paragraph referred to as the “former security”) that would, if this subsection were read without reference to this subparagraph and paragraph (h), be a small business security of the person immediately before the particular time, and (B) pursuant to an agreement entered into before the particular time and at or before the time that the former security was last acquired by the person, or (h) where the person is a small business investment corporation, small business investment limited partnership or small business investment trust, property of the person that is, at that time, a security (in this paragraph referred to as the “new security”) described in any of paragraphs (a) to (d), where the new security was issued at a particular time not more than 5 years before that time in exchange for, on the conversion of, or in respect of rights pertaining to a security that would, if this subsection were read without reference to this paragraph, be a small business security of the person immediately before the particular time. (2.1) Where all or part of the property of a person consists of the shares of the capital stock of a venture capital corporation described in section 6700, options or rights granted by the corporation, or debt obligations of the corporation, (a) the aggregate of the cost amounts to the person of all such property shall be deemed for the purposes of paragraph (2)(e) not to exceed $10,000,000; and (b) the total assets (determined in accordance with generally accepted accounting principles, on a consolidated or combined basis, where applicable) of the corporation and all corporations associated with it shall be deemed for the purposes of paragraph (2)(f) not to exceed $50,000,000. (3) For the purposes of subsection (2), (a) in determining the effective annual rate of return in respect of a debt obligation of an eligible corporation, the value of any right to convert the debt obligation or any part thereof into, or to exchange the debt obligation or any part thereof for, shares of the capital stock of the corporation or an option or right to acquire such shares shall not be considered; and (b) a corporation shall be deemed not to be