Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p27
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 27/34)
Character Range: 3592024–3594679

or interests in membership interests in the entity, of which the entity is aware;
it would be reasonable to conclude that the membership interest is not relevant in determining whether the entity is effectively owned by prescribed persons because holding the membership interest does not involve the holder bearing the risks, or result in the accrual to the holder of the opportunities, of ownership of the entity that ordinarily arise from, or are ordinarily attached to, the holding of ordinary membership interests in an entity.
 (4) In applying subsection (3), the fact that a person is a trustee is to be disregarded.
 (5) Without limiting subsection (3), a *membership interest in an entity held by a person who is not a prescribed person is an excluded membership interest if:
 (a) it is a finance membership interest; or
 (b) it is a distribution access membership interest; or
 (c) it does not carry the right to receive distributions; or
 (d) it was issued, transferred or acquired for a purpose (other than an incidental purpose) of ensuring that the entity is not effectively owned by prescribed persons.
 (6) A *membership interest is a finance membership interest if:
 (a) the membership interest is a *non‑equity share in the entity; or
 (b) having regard to the rights attached to the membership interest and to any *arrangement with respect to the membership interest of which the entity is aware, the membership interest is equivalent to a debt owed by the entity to the holder of the membership interest.
 (7) A *membership interest to which subsection (6) does not apply is a finance membership interest if:
 (a) the manner in which the *distributions payable in respect of the membership interest are calculated, and the conditions applying to the payment of such distributions, indicate that the distributions paid are equivalent to the receipt by the person to whom they are paid of interest or an amount in the nature of or similar to interest; or
 (b) the capital invested by the holder of the membership interest will be redeemed or, because of an *arrangement between the holder and the entity or an *associate of the entity, it is reasonable for the holder to expect that the capital will be redeemed, for an amount that is not less than, or for property (including other membership interests in the entity) the value of which is not less than, the amount paid for the membership interest; or
 (c) the membership interest is redeemable by the entity by payment of a lump sum or by the transfer of property, or the membership interest has a preferred right to a repayment of capital on a winding up, where the amount of the lump