Income Tax Regulations — 5101
5101 (1) Subject to subsection (4), for the purposes of this Part and paragraph 149(1)(o.3) and paragraph (b) of the definition small business property in subsection 206(1) of the Act, a corporation is a small business investment corporation at any time if it is a Canadian corporation incorporated after May 22, 1985 and at all times after it was incorporated and before that time (a) all of the shares, and rights to acquire shares, of the capital stock of the corporation were owned by (i) one or more registered pension plans, (ii) one or more trusts all the beneficiaries of which were registered pension plans, (iii) one or more related segregated fund trusts (within the meaning assigned by paragraph 138.1(1)(a) of the Act) all the beneficiaries of which were registered pension plans, or (iv) one or more persons prescribed by section 4802 for the purposes of clause 149(1)(o.2)(iv)(D) of the Act; (b) its only undertaking was the investing of its funds and its investments consisted solely of (i) small business securities, (ii) interests of a limited partner in small business investment limited partnerships, (iii) interests in small business investment trusts, (iv) property (other than a small business security) that is (A) a share of the capital stock of a corporation (other than a share that is issued to the corporation and that is either a share described in section 66.3 of the Act or a share in respect of which an amount has been designated under subsection 192(4) of the Act), or (B) a put, call, warrant or other right to acquire or sell a share described by clause (A), (v) specified properties, or (vi) any combination of properties described in any of subparagraphs (i) to (v) and, except as provided in subsection 5104(1), with respect to properties referred to in any of subparagraphs (i) to (iii), the corporation was the first person (other than a broker or dealer in securities) to have acquired the properties and the corporation has owned the properties continuously since they were so acquired; (c) it has complied with subsection (2); (d) it did not hold, and no group of persons who did not deal with each other at arm’s length and of which it was a member held, more than 30 per cent of the outstanding shares of any class of voting stock of a corporation, except where (i) all or any part of those shares were acquired in specified circumstances within the meaning of subsection 5104(2), or (ii) those shares were of any class of voting stock of a venture capital corporation described in section 6700; (e) it has not borrowed money except from its shareholders; and (f) it has not accepted deposits. (2) Every small business investment corporation shall at all times hold properties referred to in subparagraphs (1)(b)(i) to (iii), the aggregate of the cost amounts of which is not less than 75 per cent of the amount, if any, by which (a) the aggregate of all amounts each of which is the amount of consideration for the issue of shares of its capital stock or debt to its shareholders or the amount of a contribution of capital by its shareholders received by it more than 90 days before that time exceeds (b) the aggregate of (i) all amounts paid by it before that time to its shareholders as a return of capital or a repayment of debt, and (ii) the amount, if any, by which the aggregate of its losses from the disposition of properties disposed of before that time exceeds the aggregate of its gains from the disposition of properties disposed of before that time. (3) For the purposes of subsection (2), where a small business investment corporation disposes of a property referred to in subparagraphs (1)(b)(i) to (iii), it shall be deemed to continue to hold the investment for a period of 90 days following the date of the disposition. (4) For the purposes of paragraph 149(1)(o.3) of the Act, where a small business investment corporation holds an interest in a partnership or trust that qualified as a small business investment limited partnership