Document ID: chunk:federal_register_of_legislation:C2004A00898:clause:1_4:p1
Version: federal_register_of_legislation:C2004A00898
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 1/12)
Character Range: 56696–59309

4                 An interest issued by the company that:
                  (a) gives its holder (or a *connected entity of the holder) a right to be issued with an *equity interest in the company or a *connected entity of the company; or
                  (b) is an *interest that will, or may, convert into an equity interest in the company or a connected entity of the company.

This subsection has effect subject to subsection (2) (requirement for financing arrangement).

Note: Section 974‑90 allows regulations to be made clarifying when a right or return is taken to be at discretion of a company or connected entity.

Financing arrangement

 (2) A *scheme that would otherwise give rise to an *equity interest in a company because of an item in the table in subsection (1) (other than item 1) does not give rise to an equity interest in the company unless the scheme is a *financing arrangement for the company.

Form interest may take

 (3) The interest referred to in item 2, 3 or 4 in the table in subsection (1) may take the form of a proprietary right, a chose in action or any other form.

Exception for certain at call loans—until 31 December 2002

 (4) If:
 (a) a *financing arrangement takes the form of a loan to a company by a *connected entity; and
 (b) the loan does not have a fixed term; and
 (c) under the arrangement the loan is repayable on demand by the connected entity; and
 (d) the arrangement was entered into on or after 21 February 2001;
the arrangement does not give rise to an equity interest in the company. Instead, the arrangement is taken, despite anything in Subdivision 974‑B, to give rise to a debt interest in the company. This subsection ceases to have effect on 1 January 2003.

974‑80  Equity interest arising from arrangement funding return through connected entities

 (1) This section deals with the situation in which:
 (a) an interest carries a right to a variable or fixed return from a company; and
 (b) the interest is held by a *connected entity of the company; and
 (c) apart from this section, the interest would not be an *equity interest in the company; and
 (ca) the *scheme that gives rise to the interest is a *financing arrangement for the company; and
 (d) there is a scheme, or a series of schemes, designed to operate so that the return to the connected entity is to be used to fund (directly or indirectly) a return to another person (the ultimate recipient).

 (2) The interest is an equity interest in the company if:
 (a) the amount of the return to the ultimate recipient is in substance or effect *contingent on the economic performance