Income Tax Regulations — 6202
ssued, (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 paragraph (a) solely because (A) it is to be cancelled on the conversion within five years from the date of its issue, (B) its paid-up capital is to be reduced on the conversion within five years from the date of its issue, or (C) both clauses (A) and (B) apply, and (iii) not described in paragraph (c), or (j) that (i) may have a share substituted or exchanged for it pursuant to its terms or the terms or conditions of an agreement in existence at the time of its issue and no consideration is to be received or receivable for it in respect of the substitution or exchange other than the share substituted or exchanged for it, (ii) is described in paragraph (a) solely because it is to be redeemed, acquired or cancelled on the substitution or exchange within five years from the date of its issue, and (iii) is not a share to which paragraph (f) applies, and for the purposes of this section, (k) where a person has an interest in a trust, whether directly or indirectly, through an interest in any other trust or in any other manner whatever, the person shall be deemed to be a beneficiary of the trust; (l) in determing whether an acquired share would be a prescribed share if issued, (i) the references in paragraphs (a), (b), (d) and (e) to “date of its issue” shall be read as “date of the issue of the convertible share”, (ii) the reference in paragraph (f) to “issue of the first share” shall be read as “issue of the convertible share”, and (iii) this section shall be read without reference to paragraph (g) and to the words “after December 31, 1982”; (m) in determining whether a substituted share would be a prescribed share if issued, (i) the references in paragraphs (a) to (e) to “date of its issue” shall be read as “date of the issue of the first share”, and (ii) this section shall be read without reference to paragraph (g) and to the words “after December 31, 1982”; (m.1) an excluded obligation in relation to a share of a class of the capital stock of the issuing corporation and an obligation that would be an excluded obligation in relation to the share if the share had been issued after June 17, 1987, shall be deemed not to be a guarantee, security or similar indemnity with respect to the share for the purposes of paragraph (b); (n) a guarantee, security or similar indemnity referred to in paragraph (b) shall, for greater certainty, not be considered to take effect within five years from the date of issue of a share if the effect of the guarantee, security or indemnity is to provide that a member of the related issuing group will be able to redeem, acquire or cancel the share at a time that is not within five years from the date of issue of the share; and (o) where an expense is incurred partly in consideration for shares (referred to in this section as “first corporation shares”) of the capital stock of one corporation and partly in consideration for an interest in, or right to, shares (referred to in this paragraph as “second corporation shares”) of the capital stock of another corporation, in determining whether the second corporation shares are prescribed shares, the references in paragraphs (a), (d) and (e) to “date of its issue” shall be read as “date of the issue of the first corporation shares”. (2) For the purposes of paragraph 66(15)(d.1) of the Act, subsection (1) does not apply in respect of a share of the capital stock of an issuing corporation that is a new share. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] SOR/85-174, s. 16; SOR/90-86, s. 1; SOR/92-681, s. 3(F); SOR/94-686, ss. 34(F), 79(F)