Document ID: chunk:federal_register_of_legislation:C2004A01073:clause:1_6:p5
Version: federal_register_of_legislation:C2004A01073
Segment Type: clause
Provision Reference: sch 1 cl 6 (pt 5/10)
Character Range: 17309–19923

convertible note or convertible preference share.

118‑420  Meaning of eligible venture capital partner etc.

 (1) A partner in a *limited partnership is an eligible venture capital partner if:
 (a) the partner is a *tax‑exempt non‑resident; or
 (b) the partner is a *foreign venture capital fund of funds, and the sum of:
 (i) the partner's *committed capital in the partnership; and
 (ii) the sum of the amounts of committed capital in the partnership of any entities that are *connected entities of the partner;
  does not exceed 30% of the partnership's committed capital; or
 (c) the partner meets the requirements set out in subsection (6), and the sum of:
 (i) the partner's committed capital in the partnership; and
 (ii) the sum of the amounts of committed capital in the partnership of any entities that are connected entities of the partner;
  is less than 10% of the partnership's committed capital.

Note: Subsection (7) prevents some trusts from being eligible venture capital partners.

 (2) An entity that is an *associate of the partner only because the entity is a partner in the partnership in question is taken not to be a *connected entity of the partner for the purposes of subparagraphs (1)(b)(ii) and (c)(ii).

 (3) An entity is a tax‑exempt non‑resident if:
 (a) the entity is a foreign resident; and
 (b) the entity is a resident of:
 (i) Canada; or
 (ii) France; or
 (iii) Germany; or
 (iv) Japan; or
 (v) the United Kingdom; or
 (vi) the United States of America; or
 (vii) any other foreign country prescribed by the regulations; and
 (c) the entity's income is exempt, or effectively exempt, from taxation in the entity's country of residence.

 (4) An entity that is a *limited partnership is a foreign venture capital fund of funds if:
 (a) the partnership was established by or under a law in force in, or in a part of:
 (i) Canada; or
 (ii) France; or
 (iii) Germany; or
 (iv) Japan; or
 (v) the United Kingdom; or
 (vi) the United States of America; or
 (vii) any other foreign country prescribed by the regulations; and
 (b) every partner who is a *general partner is a resident of a country referred to in paragraph (a); and
 (c) the partnership is not a general partner of a *VCLP.

 (5) An entity that is not a *limited partnership is a foreign venture capital fund of funds if:
 (a) whether by operation of law or by election, the entity is not taxed as an entity in its country of residence, but the entity's income is taxed to its members according to their interests in the entity; and
 (b) the entity was established by or under a law in force in, or in a part of:
 (i)