Canadian Ownership and Control Determination Regulations, 1984 (SOR/84-431)

Short Title

1 These Regulations may be cited as the Canadian Ownership and Control Determination Regulations, 1984.

PART IInterpretation and Application

Definitions

• 2 (1) In these Regulations,

  Act

  Act means the Canadian Ownership and Control Determination Act; (Loi)

  active member

  active member means

  • (a) in relation to a defined benefit pension plan or a combined defined benefit defined contribution pension plan, an individual who is currently earning current service benefits in that plan, and

  • (b) in relation to a defined contribution pension plan or a deferred profit sharing plan, an individual in respect of whom contributions are currently being made to the plan as a result of current service; (membre actif)

  applicant

  applicant means a person who has submitted an application for a certificate under the Act; (demandeur)

  bearer unit

  bearer unit means a unit of a class of formal equity or a unit of a class of forward equity of an entity in respect of which no records of unit holders are maintained by or on behalf of the entity; (unité au porteur)

  block

  block[Revoked, SOR/85-847, s. 1]

  Canadian stock exchange

  Canadian stock exchange means The Alberta Stock Exchange, the Montreal Exchange, The Toronto Stock Exchange, the Vancouver Stock Exchange or the Winnipeg Stock Exchange; (bourse de valeurs canadienne)

  dealer

  dealer means a person registered to trade or deal in security pursuant to the laws of a province; (courtier)

  defined benefit pension plan

  defined benefit pension plan means a pension plan where the benefits under the plan are determined in accordance with a formula set forth in the plan and where the employer contributions under the plan are not so determined; (régime de pension à prestations fixes)

  defined contribution pension plan

  defined contribution pension plan means a pension plan where the employer contributions and the employee contributions, if any, under the plan are determined in accordance with a formula set forth in the plan; (régime de pension à cotisations fixes)

  entity

  entity means a corporation, partnership or trust; (entité)

  forward equity

  forward equity means a right to acquire formal equity; (participation à terme)

  holding

  holding[Revoked, SOR/85-847, s. 1]

  inquiry

  inquiry means a request made by an entity that is an applicant or an investor, to a person that owns formal equity of that entity, for information in respect of the Canadian ownership rate of that person for the purposes of determining, in whole or in part, the Canadian ownership rate of that entity; (examen)

  market-maker

  market-maker means a registered trader or a registered arbitrage trading member within the meaning of the rules of the Toronto Stock Exchange or a person acting in a substantially similar capacity in connection with any other Canadian stock exchange; (contrepartiste)

  market-maker shares

  market-maker shares means units owned by a market-maker that constitute units of the stock of responsibility of that market-maker and that constitute one-half of one per cent or less of a publicly traded class of formal equity; (actions de contrepartiste)

  measured block

  measured block means a number of units of a class of formal equity that are owned by a person and that are equal to or greater than the number of units that constitute the measured block threshold for that class of formal equity; (tranche mesurée)

  measured block threshold

  measured block threshold, in respect of a particular class of formal equity, means

  • (a) where the particular class is that of an applicant or of an investor that is equity-related to the applicant, one per cent, and

  • (b) where the particular class is that of an investor other than an investor referred to in paragraph (a), 5 per cent,

  of the units of the particular class or, where the particular class is one of two or more classes of formal equity the units of which would form part of the same class of formal equity if they were actually issued and outstanding, of the units of such one of those two or more classes as has the greatest number of units; (seuil d’une tranche mesurée)

  primary investor

  primary investor means, with respect to an applicant, an investor

  • (a) of whom an inquiry is made by an applicant or by an investor that is equity-related to the applicant,

  • (b) who is not equity-related to the applicant, and

  • (c) who owns formal equity of the applicant or the investor referred to in paragraph (a); (investisseur primaire)

  public entity

  public entity means an entity with one or more publicly traded classes of formal equity, all the units of which would, if owned by one person, represent a direct equity percentage of 15% or more in respect of the entity; (entité publique)

  publicly traded class of formal equity

  publicly traded class of formal equity or publicly traded class of forward equity means a class of formal equity or a class of forward equity, as the case may be, any unit of which is traded in the open market in the manner in which a unit thereof would normally be traded in the open market by a member of the public; (catégorie de participation ordinaire librement négociable or catégorie de participation à terme librement négociable)

  published market

  published market means a Canadian stock exchange on which units of a publicly traded class of formal equity are listed or any other market on which such units are traded, if the prices at which they have been traded on that other market are regularly published in a bona fide newspaper or in a business or financial publication of general distribution and regular paid circulation; (cours affiché du marché)

  recorded owner

  recorded owner means the owner of record of formal equity of an entity; (possesseur inscrit)

  revised unit holders list

  revised unit holders list means a revised unit holders list prepared pursuant to section 4; (liste révisée des détenteurs d’unités)

  secondary investor

  secondary investor means, with respect to an applicant, an investor

  • (a) of whom an inquiry is made by another investor that is not equity-related to the applicant, and

  • (b) who owns formal equity of the investor making the inquiry; (investisseur secondaire)

  significant holding

  significant holding[Revoked, SOR/85-847, s. 1]

  small applicant

  small applicant means an applicant that is an entity

  • (a) that has total assets calculated in accordance with section 9 of less than $50,000,000,

  • (b) [Revoked, SOR/85-847, s. 1]

  • (c) that has no knowledge or reason to believe that the Canadian ownership rate of the entity that would be determined under the Act and these Regulations, if section 14 did not apply, is less than 75%, and

  • (d) that has no units listed, registered or qualified for trading on a stock exchange or other trading facility, other than a Canadian stock exchange or Canadian trading facility, as a consequence of an application for such listing, registration or qualification made by the entity or in which the entity has participated directly or indirectly; (petit demandeur)

  stock of responsibility

  stock of responsibility means all or part of a publicly traded class of formal equity designated as the stock of responsibility of a market-maker in accordance with the rules of The Toronto Stock Exchange or substantially similar rules of any other Canadian stock exchange; (charge de contrepartiste)

  unit

  unit means

  • (a) in relation to a class of formal equity of an entity, subject to subsection 5(3) and Part VI, any particular share, right or interest that is formal equity of that entity, and

  • (b) in relation to a class of forward equity of an entity, any instrument other than an agreement described in section 23, that confers a right to acquire units of a class of formal equity of that entity, other than a right that may be terminated prior to the commencement of the period during which the right may be exercised; (unité)

  unit holders list

  unit holders list means a record kept by or on behalf of an entity that identifies the recorded owners of units of a class of formal equity or units of a class of forward equity of that entity; (registre)

  unit trust

  unit trust means a trust under which the interest of a beneficiary is measured by reference to one or more defined shares, whether of one or more classes, in the property of the trust. (fiducie d’investissement à participation unitaire)

• (2) Subject to subsection (2.1), for the purpose of determining whether a person has a number of units of a class of formal equity equal to or greater than the number of units thereof that constitute the measured block threshold therefor, two or more entries on an entity’s unit holders list that show units of the class of formal equity as being registered in the name of a particular person, or in the name of a particular member of a class of persons referred to in Schedule I, shall be deemed to be registered in substantially the same manner and considered to be one entry if

  • (a) the entries show substantially the same address and there is no account identification number or other feature that distinguishes the entries from each other;

  • (b) the entries show different addresses but the entity has knowledge or reason to believe that the units are owned by the same person; or

  • (c) the entries show different account identification numbers or other features that distinguish the entries from each other but show the same or substantially the same address and the entity has knowledge or reasons to believe that the units are owned by the same person.

• (2.1) An entry in a unit holders list of units of a class of formal equity shall not be taken into account for the purpose of subsection (2) unless the entry relates to a number of units equal to or greater than 10 per cent of the number of units that constitute the measured block threshold for that class of formal equity.

• (3) Notwithstanding the definition measured block threshold in subsection (1), where an applicant or an investor has two or more classes of formal equity to which are attached rights, other than voting rights, that are substantially similar, the measured block threshold for each such class shall be deemed to be the number of units that constitute the measured block threshold for such one of those two or more classes as, apart from this subsection, would have the largest number of units in its measured block threshold.

Application

3 These Regulations apply for the purpose of determining or calculating the Canadian ownership rate in respect of any application filed on or after June 1, 1984.

Revised Unit Holders List

• 4 (1) An entity may prepare a revised unit holders list and may include therein the following:

  • (a) any entry on the entity’s unit holders list relating to units of a class of formal equity with respect to which the entity has no knowledge or reason to believe that they are owned by a person other than the recorded owner;

  • (b) any entry on the entity’s unit holders list relating to units of a class of formal equity that are not referred to in paragraph (a) if the number of units to which the entry relates is less than the number of units that constitute the measured block threshold for that class of formal equity;

  • (c) any entry consisting of a statement of the number of units of a class of formal equity owned by any person;

  • (d) any entry consisting of a statement of a number of units of a class of formal equity held for persons with addresses in Canada if each such person has a number of units thereof that is less than the number of units that constitute the measured block threshold for that class of formal equity; and

  • (e) any other entry that the entity demonstrates to the Minister that it is necessary to include in order to show accurately the ownership of any units.

• (2) and (3) [Revoked, SOR/85-847, s. 2]

• (4) For the purposes of paragraph (1)(a) an entity shall be deemed to have reason to believe that units shown on its records are owned by a person other than the recorded owner of those units if the recorded owner is a person or a member of a class of persons referred to in Schedule I.

Classes of Formal Equity and Classes of Forward Equity

• 5 (1) For the purposes of these Regulations,

  • (a) a class of formal equity of a partnership or trust, subject to subsections (2) and (3), comprises all substantially similar units; and

  • (b) a class of formal equity of a corporation comprises all shares that are part of the same class of the corporation or, if the class consists of more than one series, of the same series.

• (2) For the purposes of these Regulations, an applicant or investor may elect that additional units of a class of formal equity issued on or after any day selected by that applicant or investor in respect of that class under paragraph 30(1)(c) shall constitute a separate class of formal equity.

• (3) For the purposes of these Regulations,

  • (a) all rights expressed as a fixed percentage of income or revenue that in the aggregate represent 100% of that income or revenue at a particular time,

  • (b) all rights expressed as a fixed percentage of capital that in the aggregate represent 100% of that capital at a particular time, or

  • (c) all rights expressed as a fixed percentage of income and capital or revenue and capital that in the aggregate represent 100% of that income and capital or revenue and capital at a particular time

  in respect of all or a specified portion of the property of a partnership constitute a class of formal equity that shall be deemed to compromise 100 units owned by the owners of interests in the class of formal equity in the proportions that their interests represent of that class of formal equity.

• (4) For the purposes of these Regulations, a class of forward equity comprises all units the attributes of which are identical and that were issued on the same day and at the same price if any.

Exclusions from Formal Equity

• 6 (1) There shall, for the purpose of determining the Canadian ownership rate of any person or class of persons, be excluded from the formal equity of a corporation,

  • (a) during a 60 day period from the day on which the underwriting agreement was signed, any share of a publicly traded class of formal equity that a dealer, acting as an underwriter pursuant to an underwriting agreement, owns;

  • (b) any unit that was a bearer unit on February 9, 1982; and

  • (c) any unit that has a fixed or determinable yield not exceeding a reasonable yield in relation to the market yield of a comparable unit on the date of issue of the unit.

• (2) For the purposes of paragraph (1)(c), the calculation of the yield shall take into consideration any incentive that the person or class of persons referred to in that subsection would, based on a Canadian ownership rate determined as if the unit and all other units of the same class of formal equity were included in formal equity, be qualified to receive pursuant to the Petroleum Incentives Program Act in respect of the consideration paid on the issue of the units.

• (3) Where, in respect of units of a class of formal equity of an entity, the entity would have a total equity percentage of 100% calculated as if those units constituted all the formal equity of the entity, those units shall be excluded from formal equity for the purpose of determining the Canadian ownership rate of that entity.

Equity-Relatedness Defined

• 7 (1) For the purposes of these Regulations, equity-related persons or persons equity-related to each other means

  • (a) individuals connected by blood relationship, marriage or adoption;

  • (b) an entity and

    • (i) a person who has a direct equity percentage in the entity of more than 50%,

    • (ii) a person who is a member of an equity-related group the members of which have an aggregate direct equity percentage in the entity of more than 50%, or

    • (iii) any person equity-related to a person described in subparagraph (i) or (ii); or

  • (c) any two entities

    • (i) if one person has a direct equity percentage in each entity of more than 50% or the members of one equity-related group of persons have an aggregate direct equity percentage in the entity of more than 50%,

    • (ii) if one person has a direct equity percentage in one of the entities of more than 50% and that person is equity-related to a person who has a direct equity percentage in the other entity of more than 50%,

    • (iii) if one person has a direct equity percentage in one of the entities of more than 50% and that person is equity-related to any member of an equity-related group the members of which have an aggregate direct equity percentage in the other entity of more than 50%,

    • (iv) if one person has a direct equity percentage in one entity of more than 50% and that person is equity-related to each member of an unrelated group the members of which have an aggregate direct equity percentage in the other entity of more than 50%,

    • (v) if any member of an equity-related group the members of which have an aggregate direct equity percentage in one of the entities of more than 50% is equity-related to each member of an unrelated group the members of which have an aggregate direct equity percentage in the other entity of more than 50%,

    • (vi) if each member of an unrelated group the members of which have an aggregate direct equity percentage in one of the entities of more than 50% is equity-related to at least one member of an unrelated group the members of which have an aggregate direct equity percentage in the other entity of more than 50%, or

    • (vii) if any member of an equity-related group the members of which have an aggregate direct equity percentage in one of the entities of more than 50% is equity-related to each member of an equity-related group the members of which have an aggregate direct equity percentage in the other entity of more than 50%.

• (2) Where two entities are equity-related to the same entity, the entities are, for the purposes of these Regulations, equity-related to each other.

• (3) For the purposes of these Regulations,

  • (a) equity-related group means a group of persons each member of which is equity-related to every other member of the group;

  • (b) unrelated group means a group of persons that is not an equity-related group; and

  • (c) where a person has a direct equity percentage in two or more entities, that person is, as a person having a direct equity percentage in one of the entities, equity-related to himself as a person having a direct equity percentage in each of the other entities.

• (4) For the purposes of these Regulations,

  • (a) persons are connected by blood relationship if one is the child or other descendant of the other or if one is the brother or sister of the other;

  • (b) persons are connected by marriage if one is married to the other or to a person who is connected by blood relationship to the other; and

  • (c) persons are connected by adoption if one has been adopted, either legally or in fact, as the child of the other or as the child of a person who is connected by blood relationship, otherwise than as a brother or sister, to the other.

Direct Equity Percentage Defined

• 8 (1) For the purposes of paragraph (b) of the definition direct equity percentage in subsection 35(1) of the Act, direct equity percentage means

  • (a) where factors by which all classes of formal equity of the particular person referred to in that paragraph may be weighted are determined in a manner acceptable to the Minister, the sum of the products obtained when the number of units in each class of formal equity of the particular person referred to in that paragraph that is owned by the person referred to in that paragraph are multiplied by the corresponding weighting factor referred to in subsection (2), expressed as a percentage of the sum of the products obtained when the total number of units in each class of formal equity of the particular person is multiplied by the corresponding weighting factor referred to in subsection (2); and

  • (b) where factors by which all classes of formal equity of the particular person referred to in that paragraph may be weighted cannot be determined in a manner acceptable to the Minister, the greater of

    • (i) the greatest of the results obtained when the sums of the products obtained by multiplying the number of units owned by the person referred to in that paragraph in the classes of formal equity of the particular person for which relative weighting factors can be determined in a manner acceptable to the Minister by the corresponding weighting factors referred to in subsection (2) are each expressed as a percentage of the sum of the products obtained when the total numbers of units in those classes are multiplied by the corresponding weighting factors referred to in subsection (2), and

    • (ii) the greatest of the results obtained when the number of units in each class of formal equity of the particular person that is owned by the person for which a weighting factor cannot be determined in a manner acceptable to the Minister is expressed as a percentage of the number of units in that class.

• (2) For the purposes of subsection (1)

  • (a) where factors by which all classes of formal equity of the particular person referred to in that subsection may be weighted are determined in a manner acceptable to the Minister, the weighting factor for a class of formal equity shall be the weighting factor that would be determined for that class under paragraph 16(3)(a) if each class of formal equity were to consist of the same number of units; and

  • (b) where factors by which all classes of formal equity of the particular person referred to in that subsection may be weighted cannot be determined in a manner acceptable to the Minister, the weighting factor for a class of formal equity shall be the weighting fact that would be determined for that class under subparagraph 16(3)(b)(i) if each relevant class of formal equity were to consist of the same number of units.

Determination of Total Assets of Small Applicant

• 9 (1) For the purpose of paragraph (a) of the definition small applicant in subsection 2(1), the total assets of an entity are, subject to subsection (4), the greatest of

  • (a) the assets of the entity that would be shown on its balance sheet,

  • (b) the assets that would be shown on any consolidated balance sheet of the entity, and

  • (c) where the entity’s assets would be included in the consolidated balance sheet of any other entity, the assets that would be shown on the consolidated balance sheet of that other entity,

  as at the end of the most recently completed fiscal period of the relevant entity, if the balance sheet or consolidated balance sheet, as the case may be, were prepared in accordance with the applicable standards of the Canadian Institute of Chartered Accountants as set out in the Canadian Institute of Chartered Accountant’s Handbook or, where such standards are not so set out, in accordance with generally accepted accounting principles.

• (2) For the purposes of subsection (1), where the most recently completed fiscal period of an entity ended not earlier than 180 days prior to the day on which an application is filed by the entity in substantial compliance with the Act and these Regulations and no balance sheet is available for that fiscal period, the immediately preceding completed fiscal period of the entity is its most recently completed fiscal period.

• (3) An entity that does not have a completed fiscal period may, for the purposes of subsection (1), elect that a period commencing on the day it commenced doing business and ending on any day not earlier than 180 days prior to the date on which an application is filed by the entity in substantial compliance with the Act and these Regulations shall be its most recently completed fiscal period.

• (4) Where, in the opinion of the Minister, the total assets shown on the balance sheet or consolidated balance sheet of an entity do not fairly represent the total assets of that entity, the Minister may, for the purposes of these Regulations, adjust those assets in the manner he considers appropriate.

• (5) [Revoked, SOR/85-847, s. 3]

Trust Property

10 A unit of formal equity of an entity that is held in trust by a trustee shall, for the purposes of determining the Canadian ownership rate of any person or class of persons, be deemed to be owned by the trust and any beneficial interest of a person in that unit shall be deemed to be formal equity of the trust owned by the person.

Prescription of Persons Qualified to Apply for a Certificate

11 A corporation incorporated outside Canada is qualified to apply for a certificate if

• (a) all of its formal equity is owned by a corporation incorporated in Canada;

• (b) it was incorporated prior to October 29, 1980; and

• (c) its activities have been conducted primarily in Canada at all times after October 28, 1980.

PART IISpecified Canadian Ownership Rates

Canadian Ownership Rate of Applicants or Investors

• 12 (1) For the purposes of these Regulations Her Majesty in right of Canada or a province and the following, whether as applicants or investors, are considered to have a Canadian ownership rate of 100%:

  • (a) an individual who is qualified to apply for a certificate under the Act;

  • (b) a trust governed by a registered retirement savings plan or a registered retirement income fund within the meaning of the Income Tax Act if the beneficiary of the trust is an individual qualified to apply for a certificate;

  • (c) a trust governed by a deferred profit sharing plan within the meaning of the Income Tax Act;

  • (d) a pension trust or pension corporation in respect of a fund governed by a defined contribution pension plan;

  • (e) a pension trust or pension corporation in respect of a fund governed by a defined benefit pension plan or a combined defined benefit defined contribution pension plan and having at least twenty-five active members;

  • (f) a trust that is a public entity if

    • (i) any trustee of the trust that is a corporation is licensed or otherwise authorized under the laws of Canada or a province to carry on the business of offering to the public its services as trustee,

    • (ii) not less than 80% of all trustees of the trust who are individuals are qualified to apply for a certificate, and

    • (iii) the trustees or administrators of the trust have no knowledge or reason to believe that less than 90% of the aggregate value of all units in the trust is held for the benefit of persons who would qualify for a Canadian ownership rate of 100%;

  • (g) a cooperative corporation organized under the laws of Canada or a province, if

    • (i) at least 90% of the members and 90% of the shareholders, if any, of the corporation are shown on the records of the corporation as having addresses in Canada,

    • (ii) at least 90% of the shares, if any, of the corporation are shown on the records of the corporation as being registered in the names of persons having addresses in Canada, and

    • (iii) the corporation has no knowledge or reason to believe that less than 90% of the members and 90% of the shareholders, if any, of the corporation are persons who would qualify for a Canadian ownership rate of 100%, or that less than 90% of the shares are owned by persons who would qualify for a Canadian ownership rate of 100%; and

  • (h) an entity that is a registered charity under the Income Tax Act.

• (2) An individual who is not qualified to apply for a certificate under the Act shall be considered to have a Canadian ownership rate of nil.

13 Notwithstanding paragraphs 12(1)(c), (d) and (e), a trust, a pension trust or pension corporation referred to in those paragraphs shall not be considered to have a Canadian ownership rate of 100% unless

• (a) the plan is registered under the Income Tax Act;

• (b) at least 80% of any trustees who are individuals are qualified to apply for a certificate under the Act;

• (c) at least 90% of the active members are shown on the records maintained in respect of the plan as having addresses in Canada; and

• (d) the administrators, trustees or insurers of the trust or corporation have no knowledge or reason to believe that less than 90% of the active members are persons who would qualify for a Canadian ownership rate of 100%.

Canadian Ownership Rate of Small Applicant

14 The Canadian ownership rate of a small applicant is 75%.

Canadian Ownership Rate of Secondary Investors

• 15 (1) Where a secondary investor would, in the application of the Investment Canada Act, be determined pursuant to subsection 26(1) of that Act to be a Canadian-controlled entity for the purposes of that Act, the secondary investor may elect to be treated as having a Canadian ownership rate of 100% in respect of an application if the aggregate of

  • (a) the direct and indirect equity percentages in respect of the applicant of the secondary investor, and

  • (b) the direct and indirect equity percentages, in respect of the applicant, of all secondary investors that are equity-related to the secondary investor and that make an election under this subsection

  does not exceed 10%.

• (2) This section does not apply to any secondary investor

  • (a) that is also a primary investor in respect of the relevant applicant;

  • (b) that is equity-related to that applicant or to any primary investor; or

  • (c) to whom a certificate based on a Canadian ownership rate referred to in section 14 has been issued and is in effect.

PART IIICanadian Ownership Rates other than Specified Rates and Rates of Insurance Companies and Trusts

Canadian Ownership Rate Determination

• 16 (1) Subject to Parts II and V and section 50, the Canadian ownership rate of an entity shall be determined in accordance with this Part.

• (2) Subject to subsection (5) and sections 28 and 29, the Canadian ownership rate of an entity having one class of formal equity shall be obtained by calculating the beneficial Canadian ownership of that class of formal equity determined in accordance with section 25, rounded to the nearest whole number.

• (3) Subject to subsection (5) and sections 28 and 29, the Canadian ownership rate of an entity that has more than one class of formal equity shall be obtained by calculating

  • (a) the average of the beneficial Canadian ownerships of all classes of formal equity of the entity, each weighted by a factor determined in a manner acceptable to the Minister, rounded to the nearest whole number, or

  • (b) where factors by which each class of formal equity of the entity may be weighted cannot be determined in a manner acceptable to the Minister, the lower

    • (i) of the lowest of each of the averages of the beneficial Canadian ownerships of any classes of formal equity of the entity for which weighting factors can be determined in a manner acceptable to the Minister, each weighted by the applicable factor, and

    • (ii) the lowest of the beneficial Canadian ownerships of any classes of formal equity of the entity for which a weighting factor cannot be determined in a manner acceptable to the Minister,

    rounded to the nearest whole number.

• (4) Where a factor by which the beneficial Canadian ownership of a class of formal equity of an entity may be weighted with that of each other class of formal equity cannot be determined in a manner acceptable to the Minister and the Minister considers it appropriate, all units of that class shall be excluded from formal equity for the purposes of subsection (3) and the definition formal equity in subsection 35(1) of the Act.

• (5) Subject to sections 28 and 29 the Canadian ownership rate of a pension trust, pension corporation or trust governed by a deferred profit sharing plan shall be obtained by calculating

  • (a) with respect to a trust or pension corporation referred to in paragraph 12(1)(c), (d) or (e) that would have a Canadian ownership rate of 100% but for paragraph 13(b), (c) or (d), the proportion x/y, expressed as a percentage rounded to the nearest whole number, where

    • (i) x is the number of its active members who are persons with addresses in Canada, and

    • (ii) y is the total number of its active members; and

  • (b) with respect to a pension trust or pension corporation in respect of a fund referred to in paragraph 12(1)(e) that would qualify for a Canadian ownership rate of 100% but for the fact that it has less than twenty-five active members, the proportion x/y, expressed as a percentage rounded to the nearest whole number, where

    • (i) x is the total liabilities of the fund in respect of individuals qualified to apply for a certificate, and

    • (ii) y is the total liabilities of the fund in respect of all members.

17 Where two or more entities have reciprocal ownership of units of classes of formal equity that are included in a measured block, the beneficial Canadian ownership of such classes shall be determined by solving the system of simultaneous equations that define the beneficial Canadian ownership of each such class.

Canadian Ownership Rate of Investor Issued with a Certificate

18 Subject to section 29, and notwithstanding any other provision of these Regulations

• (a) the Canadian ownership rate of an investor to whom a certificate, other than a certificate based on a Canadian ownership rate referred to in section 14 of these Regulations or in section 9 of the Canadian Ownership and Control Determination Regulations, has been issued shall, on any day of a period that begins on the day of issue of the certificate and terminates on the day the effective period of the certificate terminates, be the Canadian ownership rate determined by the Minister in respect of which that certificate was applied for less any percentage points added pursuant to subsection 28(1); and

• (b) an investor to whom a certificate based on a Canadian ownership rate referred to in section 14 has been issued may elect that its Canadian ownership rate shall be deemed to be 75% on any day on which that certificate is in effect.

Units Owned by Investor Deemed Owned by Another Person

19 Subject to section 20, a person who has a right under a contract to acquire a number of units of a class of formal equity that constitute a measured block or a number of units of a class of forward equity that, on conversion into formal equity, would constitute a measured block shall be deemed to be the owner of those units unless

• (a) the Canadian ownership rate of that person is equal to or greater than the Canadian ownership rate of the actual owner,

• (b) and (c) [Revoked, SOR/85-847, s. 7]

• (d) the contract is an exchange-traded option contract,

• (e) the contract provides that the units will be acquired at not less than fair market value as at the date of acquisition,

• (f) the right under the contract is contingent on an event that could not reasonably be expected to occur,

• (g) the right under the contract cannot be exercised until the death of the actual owner of the units, or

• (h) the right under the contract is held solely for the purpose of safeguarding the interests of that person in respect of a loan made or debt purchased by that person.

• 20 (1) Where a person has an unconditional right under a contract of purchase and sale to units of a class of formal equity or of a class of forward equity, and the agreement of purchase and sale was entered into not more than two years prior to the day selected under paragraph 30(1)(c) in respect of the class, he shall be deemed for the purposes of these Regulations to be the owner of those units.

• (2) Where two or more persons own a unit of a class of formal equity or of a class of forward equity the person having the lowest Canadian ownership rate shall be deemed to be the sole owner of the unit.

• (3) Where two or more persons have a right to a unit of a class of formal equity or of a class of forward equity described in section 19 or subsection (1), the person having the lowest Canadian ownership rate shall be deemed to have the only such right thereto.

Constrained Shares

• 21 (1) Subject to subsection (2), where any shares of a class of formal equity of a corporation that is an applicant or investor may be sold by the corporation without the consent of the owner of those shares and the corporation gives notice of the proposed sale before the day the application is filed in substantial compliance with the Act and these Regulations, the shares shall be deemed to be owned by a person having a Canadian ownership rate required of a purchaser by the constating documents of the corporation on the day selected by the corporation under paragraph 30(1)(c).

• (2) Subsection (1) does not apply unless the applicant submits with its application an undertaking of the corporation referred to in that subsection

  • (a) to complete the sale within twelve months from the date of receipt of the application acknowledged by the Minister pursuant to subsection 39(1) of the Act; and

  • (b) to advise the Minister of the date of the completion of the sale.

• (3) Where the ownership of any units of a class of formal equity of a corporation is restricted by the constating documents of the corporation to persons having a minimum specified Canadian ownership rate, all such units shall be deemed to be owned by a person having the Canadian ownership rate required of the owner by the constating documents of the corporation if the corporation provides the Minister with an undertaking acceptable to the Minister to enforce the restriction throughout the effective period of the relevant certificate.

Unissued Units Deemed Issued and Outstanding

• 22 (1) For the purposes of this section,

  • (a) a reference to an “applicant” includes an investor that is equity-related to the applicant and any investor that has a direct equity percentage or indirect equity percentage in respect of the applicant of 10% or more and any other investor that elects to be subject to this section; and

  • (b) the number of units of a class of formal equity issuable in connection with a class of forward equity shall be the number issuable on the day selected under paragraph 30(1)(c) with respect to the class of formal equity or if no units of the class of formal equity are issued, the latest of the days selected for all classes of formal equity, or where no units are issuable on that day, on the day next following that day on which the units are issuable;

  • (c) [Revoked, SOR/85-847, s. 8]

• (2) For the purposes of paragraph (7)(b) and subject to subsections (3), (4) and (6), the “market price” of a unit of a class of formal equity on any day is the simple average of the closing prices of units of that class for each day on which there was a closing price that falls not more than ten days, exclusive of Saturdays, Sundays and holidays, before that day.

• (3) Where there is more than one published market for a unit and only one such published market is within Canada, the closing price of that unit shall be determined solely by reference to the published market in Canada.

• (4) Where there is more than one published market for a unit and

  • (a) more than one such published market is in Canada, or

  • (b) no such published market is in Canada,

  the closing price of that unit shall be determined solely by reference to the published market within or outside Canada, as the case may be, on which the greatest volume of trading in the unit occurred during the ten days, exclusive of Saturdays, Sundays and holidays, before the day referred to in subsection (2).

• (5) For the purposes of subsections (2), (3), (4) and (7), closing price on any day means, with respect to a class of formal equity in respect of which there is a published market,

  • (a) the price per unit at which the last trade in that class of formal equity was effected in the published market on that day, exclusive of

    • (i) odd lot transactions, and

    • (ii) block transactions and other transactions effected in a manner that is recognized by the rules of the published market and that differs from the conventional pricing process applicable to that market; or

  • (b) on a day in which no transactions other than transactions referred to in subparagraphs (a)(i) and (ii) occurred and as to which closing bid and ask prices were published, the average of such bid and ask prices.

• (6) For the purposes of subsection (7), conversion price means the aggregate of

  • (a) the proportion x/y, where

    • (i) x is the lesser of

      • (A) the price paid by the first purchaser from the entity, or a person acting as an underwriter for the entity, for the unit of a class of forward equity, and

      • (B) nil, if the unit of a class of forward equity would have a value of nil on the day selected under paragraph 30(1)(c) if the right to acquire the units of a class of formal equity conferred by the unit of a class of forward equity had expired immediately prior to that day, and

    • (ii) y is the number of units issuable pursuant to the exercise of the right conferred by the unit of a class of forward equity on the day selected under paragraph 30(1)(c) or, if no units are so issuable on that day, on the day next following that day on which they are so issuable; and

  • (b) any consideration payable to the entity in connection with the issue of a unit of a class of formal equity upon exercise of such right.

• (7) Where units are issuable that, if issued would form part of a publicly traded class of formal equity of an applicant, are issuable pursuant to the exercise of a right conferred by a unit of a class of forward equity that is not a bearer unit and

  • (a) the unit of a class of forward equity was issued not more than five years prior to the day selected under paragraph 30(1)(c) with respect to the class of formal equity or if no units of the class of formal equity are issued, the latest of the days selected for all classes of formal equity in respect of the class of formal equity and the conversion price does not exceed

    • (i) the closing price, where the unit was issued pursuant to a final prospectus or other similar public offering document, on the date of that prospectus or offering document, or

    • (ii) in any other case, the closing price immediately prior to the time at which the last of the attributes of a unit of the class of forward equity was finally determined,

    by more than 30%, or

  • (b) the market price of a unit of the class of formal equity, on any day selected by the applicant that is not more than 30 days prior to the day selected by the applicant under paragraph 30(1)(c) with respect to the class of formal equity, exceeds the conversion price,

  the units of the publicly traded class of formal equity shall be deemed

  • (c) to be issued and outstanding and to have a recorded owner that is the owner of record of the unit of a class of forward equity,

  • (d) to be owned by the owner of the unit of a class of forward equity,

  • (e) to form a separate class of formal equity, and

  • (f) to form a publicly traded class of formal equity if the class of forward equity is a publicly traded class of forward equity.

• (8) Subject to subsections (9) through (12), where units of a class of formal equity of an applicant are issuable pursuant to the exercise of a right conferred by a unit of a class of forward equity, other than a unit referred to in subsection (7), the units of the class of formal equity shall be deemed

  • (a) to be issued and outstanding and to have a recorded owner that is the owner of record of the unit of the class of forward equity;

  • (b) to be owned by the owner of the unit of the class of forward equity;

  • (c) to form a separate class of formal equity; and

  • (d) to form a publicly traded class of formal equity if the class of forward equity is a publicly traded class of forward equity.

• (9) Subsection (8) does not apply where units, if issued, would form part of a publicly traded class of formal equity and the applicant demonstrates to the Minister that it has no knowledge or reason to believe that if all the units issuable pursuant to the exercise of the rights conferred by all the units of the class of forward equity were issued and outstanding and formed a separate class of formal equity, the beneficial Canadian ownership of that class would be less than the Canadian ownership rate of the applicant determined as if the class of forward equity did not exist.

• (10) Subject to subsection (11), subsection (8) does not apply where the applicant has knowledge that if all the units issuable pursuant to the exercise of the rights conferred by all the units of the class of forward equity were issued and outstanding and formed a separate class of formal equity, the beneficial Canadian ownership of that class would be greater than the Canadian ownership rate of the applicant determined as if the class of forward equity did not exist.

• (11) Where an applicant demonstrates to the Minister that the applicant has knowledge or reason to believe that a unit of a class of forward equity of the applicant

  • (a) will not be converted to a unit of a class of formal equity at any time prior to the expiration of the right conferred by the unit of the class of forward equity, subsection (8) does not apply to the unit of the class of forward equity; or

  • (b) will be converted to a unit of a class of formal equity at any time prior to the expiration of the right conferred by the unit of the class of forward equity, subsection (10) does not apply to the unit of the class of forward equity.

• (12) Subject to subsection (13), where units of a publicly traded class of formal equity of an applicant are issuable pursuant to the exercise of a right conferred by a unit of a class of forward equity that is a bearer unit and all units of that class of forward equity were offered for sale at the time of issue by the entity or its underwriters only outside Canada, the units of the class of formal equity shall be deemed

  • (a) to be issued and outstanding and owned by a person having a Canadian ownership rate of nil; and

  • (b) to form a separate class of formal equity.

• (13) Subsection (12) does not apply to a unit of a class of forward equity of the applicant where the applicant demonstrates to the Minister that the unit does not meet the conditions described in paragraph (7)(a) nor the condition described in paragraph (7)(b) and that the applicant has knowledge or reason to believe that the unit will not be converted to a unit of a class of formal equity at any time prior to the expiration of the right conferred by the unit.

• (14) Where an applicant has no knowledge or reason to believe that the beneficial Canadian ownership of units of a class of forward equity of the applicant that are issuable would be less than the applicant’s Canadian ownership rate, calculated without regard to those units, and the applicant elects that the class of forward equity be exempt from the application of this section, the class of forward equity is exempt from the application of this section.

• (15) Where units of a class of forward equity were either issued and outstanding or to be issued and outstanding pursuant to a public announcement on or prior to July 15, 1983, the applicant may elect that

  • (a) subsections (1) to (13) shall apply only in respect of those units of a class of formal equity that would have been deemed issued and outstanding as a result of the application of subsection 17(5) or (7), as the case may be, of the Canadian Ownership and Control Determination Regulations as a result of the application of those Regulations; and

  • (b) the Canadian ownership rate of the owner of the units shall be deemed to be the Canadian ownership rate that would be considered for the purposes of subsection 17(5) and (7) of the Canadian Ownership and Control Determination Regulations to be the Canadian ownership rate of a person deemed to own those units.

• (16) Where a class of forward equity of an applicant has been issued by the applicant and

  • (a) the exercise of the right conferred by a unit of the class of forward equity is subject to a restriction to the effect that the right is not exercisable if the exercise thereof would reduce the Canadian ownership rate of the applicant below a specified limit that is acceptable to the Minister, or

  • (b) the right conferred by a unit of the class of forward equity cannot be exercised unless, at the time of the exercise of the right, the owner thereof has a specified Canadian ownership rate that is acceptable to the Minister,

  the applicant may elect to be exempt from the application of subsections (2) to (13) in respect of the class of forward equity and, on the making of that election, the applicant is exempt from the application of those subsections in respect of the class of forward equity.

• (17) Units of a class of formal equity deemed issued and outstanding under this section shall cease to be so deemed on the day that is the earliest of

  • (a) the day next following the day on which the right conferred by the unit of the class of forward equity expires;

  • (b) the day next following any day on which the number of units issuable pursuant to the exercise of the right conferred by the unit of the class of forward equity is reduced.

• (18) Units of a class of formal equity deemed issued and outstanding pursuant to paragraph 22(7)(a) shall cease to be so deemed on the day that is five years from the day next following the day of issue of the unit of the class of formal equity.

• (19) For purposes of this section, a unit of a class of forward equity that was issued pursuant to a right conferred by another unit of a class of forward equity shall be deemed to have been issued on the day of issue of that other unit of a class of forward equity.

• 23 (1) Subject to subsection (2) where a person has a right to the issue of a unit of a class of formal equity or a unit of a class of forward equity under an agreement described in subparagraph 66.1(6)(a)(v), 66.2(5)(a)(v) or 66.4(5)(a)(iii) of the Income Tax Act and the unit can reasonably be expected to be issued within 24 months from the day the application for a certificate is filed in substantial compliance with the Act and these Regulations

  • (a) if the unit would, on issue, be a unit of a class of formal equity, the unit shall be deemed

    • (i) to be issued and outstanding,

    • (ii) to be owned by the owner of the right to the issue of the unit on the day selected under paragraph 30(1)(c), and

    • (iii) to form part of a separate class of formal equity, or

  • (b) if the unit would, on issue, be a unit of a class of forward equity, the unit shall be deemed

    • (i) to be issued and outstanding as of the date the agreement was entered into, and

    • (ii) to be owned by the owner of the right to the issue of the unit on the day selected under paragraph 30(1)(c)

    for the lesser of

  • (c) a period ending 24 months from the day that the application is filed in substantial compliance with the Act and these Regulations, and

  • (d) a period ending on the day on which the right to the issue of the unit terminates

  for the purposes of any Canadian ownership rate determined during that period.

• (2) Subsection (1) applies in respect of one period only for a right described in that subsection.

Calculation of the Beneficial Canadian Ownership of a Class of Formal Equity

24 [Revoked, SOR/85-847, s. 9]

25 The beneficial Canadian ownership of a class of formal equity is the proportion

• 26 (1) For the purposes of section 25 and subsection (2), street share pool means the aggregate of

  • (a) the greater of

    • (i) the aggregate number of units

      • (A) certified by each recorded owner with an address of record in Canada as owned by a person or held for a person, or

      • (B) certified by any other person as owned by a person or held for a person and contained in an entry included on the revised unit holders list pursuant to paragraph 4(1)(c), (d) or (e)

      subtracted from

      • (C) the aggregate number of units, other than units included in the revised unit holders list pursuant to paragraph 4(1)(b), registered in any name of a recorded owner referred to in clause (A), and

    • (ii) nil units; and

  • (b) the greater of

    • (i) the aggregate number of units in all measured blocks less the aggregate of the numbers of units referred to in paragraph 25(a), and

    • (ii) nil units.

• (2) For the purposes of calculating the beneficial Canadian ownership of a class of formal equity, a number of units equal to the lesser of

  • (a) the greater of

    • (i) nil units, and

    • (ii) the total number of units in the street share pool less five per cent of the number of units of the class of formal equity shown on the records of the applicant or investor, and

  • (b) a number of units equal to

    • (i) in respect of an application filed in 1984, 6%,

    • (ii) in respect of an application filed in 1985, 3%, and

    • (iii) in respect of an application filed in any year following 1985, 0%

    of the number of units of the class of formal equity shown on the unit holders list of the applicant or investor,

  shall be deemed to be owned by an investor having a Canadian ownership rate of 50%.

27 For the purposes of section 4 and notwithstanding subsection 2(2.1), where an entity does not combine into one entry in its revised unit holders list two or more entries therein that relate to units of a class of formal equity that, if combined, would be equal to or greater than the measured block threshold for that class of formal equity and that are registered in the unit holders list in substantially the same manner, the units to which the two or more entries relate shall be deemed to constitute a measured block and to be owned by a person having a Canadian ownership rate of nil, unless the entity demonstrates that the reason the entries were not combined was other than to avoid inclusion of the units to which the entries relate in a measured block.

Increases to Canadian Ownership Rate

• 28 (1) Subject to subsection (3), the Canadian ownership rate of an applicant shall be the sum of the Canadian ownership rate that would be determined in accordance with section 16 if the words “rounded to the nearest whole number”, read “rounded to the nearest tenth of a percentage point” and a percentage calculated as follows:

  • (a) where the applicant is a public entity and its Canadian ownership rate, calculated in accordance with section 16, is at least 50%, 5%;

  • (b) where the applicant is an entity other than a public entity, a percentage equal to the sum of the products obtained by multiplying

    • (i) the aggregate of the direct equity percentages and the indirect equity percentages of each investor that is a public entity and that for the purposes of the application has calculated a Canadian ownership rate of not less than 50%,

    by

    • (ii) the lesser of

      • (A) five, and

      • (B) 100 less the number of percentage points represented by the Canadian ownership rate referred to in subparagraph (i)

  rounded to the nearest whole number.

• (1.1) Subsection (1) applies only where

  • (a) the applicant has made an application for a certificate prior to the coming into force of this subsection; and

  • (b) the applicant’s Canadian ownership rate determined with regard to subsection (1) would not, in the application of sections 7 to 9 of the Petroleum Incentives Program Act for any relevant year, fall within the same appropriate range of Canadian ownership rate, as prescribed for that year by section 10 of that Act, as the applicant’s Canadian ownership rate calculated without regard to subsection (1).

• (2) For the purposes of subparagraph (1)(b)(i)

  • (a) the direct equity percentage or indirect equity percentage of a public entity in respect of any person that is a factor in determining any indirect equity percentage that is included in the calculation referred to in that subparagraph shall be deemed to be nil; and

  • (b) the direct equity percentage of any person in any other person shall be determined without reference to any class of formal equity the beneficial Canadian ownership of which was not included in the calculation of Canadian ownership rate pursuant to section 16.

• (3) Subsection (1) applies only where each investor that has elected to be treated as having a Canadian ownership rate of 100% pursuant to section 15 has a direct equity percentage or an indirect equity percentage in the applicant that is less than 5%.

• (4) Notwithstanding anything in these Regulations, the Canadian ownership rate of a person shall not exceed 100%.

29 An investor having a Canadian ownership rate of 90% or more determined in accordance with this Part, but without regard to section 28, shall be considered to have a Canadian ownership rate of 100% in respect of an applicant if the investor’s direct equity percentage and indirect equity percentage in respect of the applicant are

• (a) where the investor has determined its Canadian ownership rate pursuant to section 16 as an applicant or as an investor equity-related to an applicant, less than 50%; or

• (b) in any other case, less than 10%.

PART IVAdministration

Currency of Information

• 30 (1) For the purposes of section 41 of the Act, information and documentation relating to the Canadian ownership rate on which an application for a certificate is based shall be current as of a day or days determined as follows:

  • (a) subject to paragraphs (b) and (c), all information and documentation relating to the determination of the Canadian ownership rate of an applicant shall be current as of the day on which the applicant files that information and documentation in the form set out in the Canadian Ownership and Control Determination Forms Order, 1985 for the purposes of an application;

  • (b) subject to paragraph (c) and subsection (2), all information and documentation relating to the determination of the Canadian ownership rate of an investor shall be current as of the day on which the investor provides the applicant or another investor with the information set out in the Canadian Ownership and Control Determination Forms Order, 1985 for the purposes of an application;

  • (c) information and documentation

    • (i) relating to the calculation of the beneficial Canadian ownership of a class of formal equity of an applicant or investor, other than information referred to in paragraph (e) and including information reflected by entries on the unit holders list, and the revised unit holders list, or

    • (ii) that reflects any shareholders list, list of members, and records of liabilities relating to the determination of the Canadian ownership rate of an applicant or investor pursuant to paragraph 12(1)(c), (d), (e), (f), (g) or subsection 16(5),

    shall, subject to paragraphs (d) and (e), be current as of the close of business on a day selected by the applicant or investor that is not more than 180 days prior to the date the application or amended application is filed in substantial compliance with the Act and these Regulations;

  • (d) an applicant or investor may elect that information and documentation relating to the ownership of a unit of a class of formal equity that is part of a measured block shall be current

    • (i) in the case of an applicant, as of the day set out in paragraph (a), and

    • (ii) in the case of an investor, as of the day set out in paragraph (b); and

  • (e) in determining whether two or more entities are equity-related, information and documentation relating to ownership of units of a class of formal equity of an entity shall be current on a day selected by the applicant that is not more than 180 days prior to the day the application or amended application is filed in substantial compliance with the Act and Regulations.

• (2) For purposes of an application or an amended application, in this section referred to as “the present application”, an investor may elect that information and documentation

  • (a) described in paragraph (1)(c) in respect of the investor, and

  • (b) described in paragraph (1)(b) or (c) in respect of any other relevant investor

  shall be current as of the day or days referred to in section 41 of the Act in respect of the investor for the purposes of another application, in this section referred to as “the earlier application”, if

  • (c) an applicant or another investor was first provided with the information and documentation in the appropriate form prescribed by order of the Minister for the purposes of an application under the Act on a day that is not more than 18 months prior to the day on which the investor provides the applicant or investor with that information for the purposes of the present application,

  • (d) where the investor making the election is equity-related to an applicant, the investor was equity-related to the applicant that filed the earlier application, and

  • (e) the investor has no knowledge or reason to believe that the Canadian ownership rate that would be determined if no election were made under this subsection would be

    • (i) where the investor is not equity-related to the applicant, ten or more percentage points less than the Canadian ownership rate determined for the purposes of the earlier application, and

    • (ii) where the investor is equity-related to the applicant, one or more percentage points less than the Canadian ownership rate determined for the purposes of the earlier application, or

  • (f) where an investor determined its relevant Canadian ownership rate for the purposes of the earlier application (the “earlier rate”) in accordance with the Act and the Canadian Ownership and Control Determination Regulations, the investor has no knowledge or reason to believe that the Canadian ownership rate calculated for purposes of the present application if those Regulations applied would be less than the earlier rate by the number of percentage points referred to in subparagraph 2(e)(i) or 2(e)(ii).

• (3) Where paragraph (2)(f) applies the investor may elect to calculate the beneficial Canadian ownership of that class of formal equity or determine its Canadian ownership rate, as the case may be, in accordance with those Regulations read as though paragraph 11(1)(a) were deleted therefrom.

• (4) For the purposes of subsection (2), “equity-related” with reference to the earlier application shall have the meaning attributed to that term for the purposes of that application.

• (5) For the purposes of an amended application made pursuant to subsection 43(3) of the Act, the holder of a certificate may elect that all information and documentation relevant for the purposes of the calculation of the beneficial Canadian ownership of a class of formal equity shall be current as of the day or days referred to in subsection (1) for the purposes of the application or amended application pursuant to which the certificate was issued.

• (6) For the purposes of an amended application made pursuant to paragraph 43(1)(b) of the Act, information and documentation shall be current as of the day or days referred to in subsection 32(3).

• (7) Subject to subsection (8), for the purposes of an application made by a corporation, in this section referred to as “the amalgamated corporation”, that is the product of an amalgamation of a corporation, in this section referred to as “the amalgamating corporation”, that is, immediately prior to the time at which the amalgamation becomes effective, the holder of a current certificate under the Act, in this section referred to as “the prior certificate”, and one or more other corporations, the amalgamated corporation may elect, that where any information described in paragraph (1)(c) pertaining to the amalgamated corporation as at a time immediately after the time at which the amalgamation becomes effective may be determined with reference to information pertaining to the amalgamating corporation as at a time specified in the amalgamation agreement, such information pertaining to the amalgamating corporation and information and documentation described in paragraph (1)(b) or (c) in respect of any relevant investor shall be current as of the day or days referred to in subsection (1) for the purposes of the prior certificate.

• (8) Subsection (7) does not apply unless the application by the amalgamated corporation requests for an effective period for the new certificate that expires not later than the earliest expiry date of any of the prior certificates held by all amalgamating corporations.

Effective Periods of Certificates

• 31 (1) For the purposes of subsection 42(2) of the Act, all certificates issued pursuant to applications

  • (a) that, according to acknowledgements sent by the Minister pursuant to subsection 39(1) of the Act, were received by the Minister in the same month, and

  • (b) that are from any class of applicants selected by the Minister,

  may be assigned an additional effective period not exceeding six months, unless the applicant for the certificate requests that an additional effective period of less than six months, or that no additional effective period, be assigned to the certificate, in which case the certificate may be assigned such lesser additional effective period as the applicant specifies or no additional effective period, as the case may be.

• (2) For the purposes of subsection 42(1) of the Act, a certificate issued to a person in any class of persons shall continue to be effective for the period ending on the day that is twenty-four months after the date that is acknowledged by the Minister pursuant to subsection 39(1) of the Act as the date of receipt of the application by the Minister.

Decrease in Canadian Ownership Rate

• 32 (1) For the purposes of paragraph 43(1)(b) of the Act, the following events and transactions are prescribed circumstances:

  • (a) the death of an investor who is equity-related to the holder;

  • (b) any transaction, including the issue redemption, purchase or sale of a unit of a class of formal equity or of a class of forward equity, other than the issue of a share deemed to be issued and outstanding under section 22 or subsection 23(1) for the purposes of the determination of the Canadian ownership rate stated in a certificate, in which any of the following persons have participated directly or indirectly:

    • (i) the holder,

    • (ii) any officer, director, partner other than a limited partner, trustee or administrator of the holder,

    • (iii) any person that is equity-related to the holder, or

    • (iv) any person that becomes equity-related to the holder as a result of the transaction;

  • (c) units ceasing to be deemed to be issued and outstanding pursuant to subsections 22(17) and (18) or the expiry of the period referred to in subsection 23(1);

  • (d) the discharge of an agreement referred to in subsection 20(1) where any vendor or purchaser that is a party to the agreement of purchase and sale is equity-related to the holder;

  • (e) the acquisition of control in fact of the holder if the holder is a small applicant by a person or a change in the membership of a group of persons that controls the holder that is a small applicant; or

  • (f) if the holder is an individual and becomes a non-eligible person.

• (2) For the purposes of paragraph 43(1)(b) of the Act, the prescribed number of percentage points is, the lesser of

  • (a) 10 percentage points; and

  • (b) the number of percentage points that would result in a Canadian ownership rate of less than 50% or in a Canadian ownership rate that would, in any year prior to the day on which the holder’s current certificate would expire but for section 43 of the Act, fall within a range of Canadian ownership rates for that year described in

    • (i) paragraph 10(a) or (b) of the Petroleum Incentives Program Act, if the Canadian ownership rate set out in the certificate fell within a range for that year described in paragraph 10(c) of that Act, or

    • (ii) paragraph 10(a) of the Petroleum Incentives Program Act, if the Canadian ownership rate set out in the certificate fell within a range described in paragraph 10(b) of that Act.

• (3) For the purposes of determining whether a Canadian ownership rate of the holder has decreased as stated in paragraph 43(1)(b) of the Act, the Canadian ownership rate of the holder of a certificate upon the occurrence of a prescribed circumstance is the Canadian ownership rate that would be determined for the purposes of an application by the holder based on information and documentation that are current as of the day or days determined as follows:

  • (a) subject to paragraph (b), all information and documentation that would be relevant if such information and documentation were required to be current for the purposes of that application immediately after the occurrence of the prescribed circumstance and which result from any prescribed event, shall be current as of the day immediately following the day on which the prescribed event occurs;

  • (b) information and documentation referred to in paragraph (a) that consist of all information and documentation required to determine, pursuant to section 16, the Canadian ownership rate of an investor that is an entity may be current as of the day or days permitted to be chosen by section 30 reads as though the words “and that is not more than 180 days after the occurrence of the circumstance referred to in section 32” were inserted at the end of paragraph 30(1)(c), for the purposes of an application filed in substantial compliance with the Act and these Regulations and on the day next following the day on which the prescribed circumstance occurs;

  • (c) subject to paragraph (d), all information and documentation other than information and documentation referred to in paragraph (a) shall be current as of the day or days referred to in section 30 for the purposes of the application or amended application pursuant to which the certificate was issued; and

  • (d) the applicant may elect that all information and documentation relevant for the purposes of the calculation of the beneficial Canadian ownership of a class of formal equity shall be current as of the day or days referred to in paragraph (b).

• (4) The beneficial Canadian ownership of a class of formal equity to which paragraph (3)(a) does not apply may, at the election of the applicant, be calculated in accordance with the Act and Regulations that applied to the application pursuant to which the certificate was issued.

33 For the purposes of subsection 60(4) of the Act, the prescribed period after the Act comes into force is 5 years.

Consent of Investors to Audit or Examination

• 34 (1) The consent of any investor with which an applicant is required to provide the Minister by subsection 48(1) of the Act shall, subject to subsection (2), be completed by the investor as follows:

  • (a) where the investor is an individual, in the form set out in Schedule III; or

  • (b) where the investor is not an individual, in the form set out in Schedule IV.

• (2) Where a nominee of an investor provides the Minister with a consent referred to in subsection (1) on behalf of the investor, the consent shall be completed by the nominee in the form set out in Schedule V.

• (3) The consent of an investor or a nominee of an investor completed in accordance with the subsection (1) or (2) shall be set out on and form part of the form completed by the investor or nominee.

Prescription of Persons Required to Consent to Audit or Examination and of the Forms of Such Consent

• 35 (1) For the purposes of subsection 48(2) and (4) of the Act,

  • (a) where an applicant that is an entity would be a non-eligible person as that term is defined in subsection 3(1) of the Foreign Investment Review Act if another entity was a non-eligible person within the meaning of that subsection, that other entity is a prescribed person; and

  • (b) where an applicant that is an entity would be deemed to be a non-eligible person by reason of the application of paragraph 3(2)(b) of the Foreign Investment Review Act on the grounds that another entity not referred to in paragraph (a) was a non-eligible person, unless the contrary is established, that other entity is a prescribed person unless the Minister specifies otherwise.

• (2) For the purposes of subsection 48(5) of the Act, a prescribed person is any entity referred to in paragraph (1)(a) that owns formal equity in respect of an applicant that is an entity and that has carried on business for less than twelve months prior to the day the application is filed in substantial compliance with the Act and these Regulations and, unless the Minister specifies otherwise, any entity referred to in paragraph (1)(b) in respect of that applicant.

• (3) Where an applicant is required to provide the Minister with the consent of any person prescribed by subsection (1) or (2), the consent shall accompany the application or shall be filed after the application on the demand of the Minister and shall be in the form set out in Schedule VI.

PART VCanadian Ownership Rates of Insurance Companies

Interpretation

36 In this Part,

Canadian oil or gas investment

Canadian oil or gas investment means

• (a) a right, licence or privilege to

  • (i) explore for,

  • (ii) drill for,

  • (iii) take, or

  • (iv) store

  underground petroleum, natural gas or other related hydrocarbons in Canada,

• (b) an oil or gas well situated in Canada,

• (c) a rental or royalty computed by reference to the amount or value of production from an oil or gas well situated in Canada,

• (d) a right to or interest in any property described in paragraphs (a) to (c) including a right to receive the proceeds of disposition of that property, or

• (e) a direct equity percentage that is not less than one-half of one per cent in any entity or that represents an investment with a current market value of $1,000,000 or more, if the entity is a principal-business entity, is Canadian controlled and has a Canadian ownership rate of not less than 50%; (investissement dans le pétrole et le gaz canadiens)

fraternal benefit society

fraternal benefit society has the same meaning as in subsection 2(1) of the Canadian and British Insurance Companies Act; (société de bénéfices mutuels)

gross actuarial reserves

gross actuarial reserves has the same meaning as in subsection 82.1(1) of the Canadian and British Insurance Companies Act; (réserves actuarielles brutes)

life insurance company

life insurance company means a company registered, licensed or otherwise authorized to carry on the business of life insurance under the laws of Canada or a province and includes a fraternal benefit society; (compagnie d’assurance-vie)

life insurance policy

life insurance policy means any written contract of life insurance, other than a policy in respect of which a segregated fund is maintained, whether contained in one or more documents, an annuity contract and, in the case of insurance in a fraternal benefit society, includes any contract whether or not evidenced in writing and any certificate of membership relating in any way to life insurance; (police d’assurance-vie)

life policy in Canada

life policy in Canada means a life insurance policy issued or effected by a life insurance company on the life of a person who according to the records of the insurer had an address in Canada at the time the policy was issued or effected; (police d’assurance-vie au Canada)

mutual company

mutual company means a life insurance company without share capital or a property and casualty insurance company without share capital; (société mutuelle)

non-participating policy

non-participating policy means a life insurance policy other than a participating policy; (police d’assurance-vie sans participation)

participating policy

participating policy means a life insurance policy under which the policyholder is entitled to share, other than by way of an experience rating refund, in the profits of the insurer, other than profits in respect of property in a segregated fund; (police d’assurance-vie avec participation)

participating policyholder in Canada

participating policyholder in Canada means a policyholder in Canada of a participating policy; (titulaire de police d’assurance-vie avec participation au Canada)

policyholder in Canada

policyholder in Canada means a person shown on the records of an insurer as having an address in Canada and as being the owner of a life policy in Canada or a property and casualty policy in Canada; (assuré au Canada)

principal-business entity

principal-business entity means an entity the principal business of which is

• (a) producing, refining or marketing petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas or other related hydrocarbons, or

• (b) operating a pipeline for the transmission of oil or natural gas; (entité exploitant une entreprise principale)

property and casualty insurance company

property and casualty insurance company means a company, other than a life insurance company, that is registered, licensed or otherwise authorized to carry on the business of property and casualty insurance under the laws of Canada or a province and includes a fraternal benefit society; (compagnie d’assurance contre les accidents et les dommages à la propriété)

property and casualty insurance policy

property and casualty insurance policy means any written contract of insurance, other than life insurance or a policy in respect of which a segregated fund is maintained, whether contained in one or more documents and, in the case of insurance in a fraternal benefit society, includes any contract whether or not evidenced in writing and any certificate of membership relating in any way to insurance other than life insurance; (police d’assurance contre les accidents et les dommages à la propriété)

property and casualty policy in Canada

property and casualty policy in Canada means a property and casualty insurance policy issued or effected by a property and casualty insurance company where the persons or property at risk covered by the policy were ordinarily resident or located, as the case may be, within Canada at the time the policy was issued or effected; (police d’assurance contre les accidents et les dommages à la propriété au Canada)

segregated fund

segregated fund has the same meaning as in subsection 138.1(1) of the Income Tax Act; (fonds réservé)

stock company

stock company means a life insurance company with share capital or a property and casualty insurance company with share capital. (société par actions)

Segregated Funds

• 37 (1) The Canadian ownership rate of a segregated fund shall be calculated under these Regulations as if the segregated fund were a unit trust, the insurer were the trustee of the trust, the owners of the insurance policies in respect of which the segregated fund is maintained were the beneficiaries of the trust and the insurance policies in respect of which the segregated fund is maintained were the formal equity of the trust.

• (2) A segregated fund maintained by a life insurance company in respect of which at least fifty persons hold insurance policies shall be considered to have a Canadian ownership rate of 100% if the insurer has no knowledge or reason to believe that less than 90% of the aggregated value of all interests in the fund is held for the benefit of persons who would qualify for a Canadian ownership rate of 100%.

• (3) For the purposes of paragraph 52(g) of the Act, the control status of a segregated fund shall be the control status of the insurer.

Deemed Canadian Ownership Rate of Life Insurance Company As Applicant or Investor

38 A life insurance company incorporated in Canada shall be considered to have a Canadian ownership rate of 100% if, at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province,

• (a) it is a mutual company not less than 95% of the outstanding life insurance policies of which constitute life policies in Canada, or

• (b) it is a stock company not less than 95% of the outstanding life insurance policies of which constitute life policies in Canada and the Canadian ownership rate of which, determined under Part III, is not less than 90%

and if not less than 95% of its gross actuarial reserves for life policies in Canada are maintained in respect of policyholders in Canada.

39 A life insurance company incorporated in Canada, other than one referred to in section 38, shall be considered to have a Canadian ownership rate of 100% if

• (a) at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province not less than 95% of its gross actuarial reserves for life policies in Canada are maintained in respect of policyholders in Canada;

• (b) it has provided the Minister with an executed undertaking in a form acceptable to the Minister to allocate all of the benefits accruing to it from Canadian oil and gas investments to the owners of life policies in Canada that are participating policies, and to allocate the benefits arising from other investments to the owners of life policies in Canada in a manner consistent with the allocation of such benefits in previous years; and

• (c) where it is a stock company, it has a Canadian ownership rate, determined under Part III, of not less than 50%.

Canadian Ownership Rate of Life Insurance Company As Investor

40 Where a life insurance company incorporated outside Canada that is a mutual company is an investor, it shall be considered to have a Canadian ownership rate of 100% if

• (a) at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province,

  • (i) not less than 95% of its gross actuarial reserves for life policies in Canada are maintained in respect of policyholders in Canada, and

  • (ii) not less than 90% of its gross actuarial reserves for life policies in Canada are maintained in respect of participating policyholders in Canada;

• (b) it has provided the Minister with an executed undertaking in a form acceptable to the Minister to allocate all of the benefits accruing to it from Canadian oil and gas investments to the owners of life policies in Canada that are participating policies, and to allocate the benefits arising from other investments to the owners of life policies in Canada in a manner consistent with the allocation of such benefits in previous years; and

• (c) the Minister is satisfied that the life insurance company maintains in Canada sufficient records to permit the Minister to monitor and audit compliance with the undertaking referred to in paragraph (b).

Determination of Canadian Ownership Rate of Life Insurance Company

41 The Canadian ownership rate of a life insurance company that is a mutual company other than a mutual company referred to in section 38, 39 or 40 shall be considered to be equal to the proportion, expressed as a percentage rounded to the nearest whole number, that, as at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province, its gross actuarial reserves maintained in respect of life insurance policies for policyholders in Canada represent of its gross actuarial reserves maintained in respect of all life insurance policies.

• 42 (1) A life insurance company incorporated in Canada that is a stock company may elect to calculate its Canadian ownership rate in accordance with Part III or as the proportion

  1 - [(xp + n) / t]

  expressed as a percentage rounded to the nearest whole number, where

  • a) x is 100%, or if the maximum amount of profits earned in respect of life policies in Canada that are participating policies that may be allocated at the discretion of the directors of the company to shareholders is fixed by the company’s constating documents or governing statute, that maximum amount expressed as a percentage of the total profits earned by the insurance company in respect of its gross actuarial reserves for life policies in Canada that are participating policies;

  • b) p is the gross actuarial reserves for life policies in Canada that are participating policies;

  • c) n is the gross actuarial reserves for life policies in Canada that are non-participating policies; and

  • d) t is the gross actuarial reserves for life policies in Canada.

• (2) For the purposes of subsection (1), p, n and t shall be determined as at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province.

• 43 (1) The Canadian ownership rate of a life insurance company that is a stock company incorporated outside Canada shall be considered to be the lesser of the Canadian ownership rate determined in accordance with Part III and the proportion

  1 - [(xp + n) / t]

  expressed as a percentage rounded to the nearest whole number, where

  • a) x is 100%, or if the maximum amount of profits earned in respect of life policies in Canada that are participating policies that may be allocated at the discretion of the directors of the company to shareholders is fixed by the company’s constating documents or governing statute, that maximum amount expressed as a percentage of the total profits earned by the insurance company in respect of its gross actuarial reserves for life policies in Canada that are participating policies;

  • b) p is the gross actuarial reserves for life policies in Canada that are participating policies;

  • c) n is the gross actuarial reserves for life policies in Canada that are non-participating policies; and

  • d) t is the gross actuarial reserves for life policies in Canada.

• (2) For the purposes of subsection (1), p, n and t shall be determined as at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province.

44 Where a life insurance company can demonstrate to the satisfaction of the Minister that the determination of its Canadian ownership rate in accordance with this Part does not accurately reflect the beneficial interest in the company of its shareholders and policyholders in Canada, the Minister may adjust the Canadian ownership rate of the life insurance company to reflect the proportion of profits earned during the effective period of the relevant certificate that will be allocated to policyholders in Canada.

Canadian Ownership Rate of Property and Casualty Companies

45 The Canadian ownership rate of a property and casualty company that is a mutual company incorporated in Canada shall be considered to be the proportion, expressed as a percentage, that, as at the date of the most recent financial statements deposited in the Department of Insurance or with a similar authority of a province, its gross actuarial reserves maintained in respect of property and casualty insurance policies for policyholders in Canada represent of its gross actuarial reserves maintained in respect of all property and casualty insurance policies.

46 The Canadian ownership rate of a property and casualty insurance company that is a stock company incorporated in Canada shall be determined in accordance with Part III.

PART VICanadian Ownership Rates of Trusts

Interpretation

47 In this Part,

beneficiary

beneficiary includes a person in whose favour or for whose benefit a discretionary power may be exercised; (bénéficiaire)

designated rate of interest

designated rate of interest means 12.3% per annum; (taux d’intérêt désigné)

discretionary interest

discretionary interest means any estate or interest in or possibility of receiving income or capital of a trust that is dependent on, or the value of which may be increased or reduced by the exercise of or the failure to exercise, a discretionary power held by the trustee or trustees or by any other person or persons and, for greater certainty and without limiting the generality of the foregoing, a power to amend the terms of a trust or a power to determine the date at which all or any interests shall vest or at which all or any property shall be distributed is a discretionary power; (droit discrétionnaire)

interest in expectancy

interest in expectancy means an estate or interest in remainder or reversion and any other future interest, whether vested or contingent, but does not include a discretionary interest; (droit en expectative)

interest in possession

interest in possession means an estate or interest other than an interest in expectancy but does not include a discretionary interest. (droit en possession)

Determining Beneficial Ownership of Classes of a Trust

48 Subject to section 49, in determining the classes of formal equity and the beneficial Canadian ownership of a class of formal equity of a trust, other than a unit trust, the following rules apply:

• (a) each of the following shall be a class of formal equity of the trust, consisting of 100 units:

  • (i) all interests in possession of beneficiaries whose interests can be expressed in terms of a right to a certain amount or percentage of all or any part of the income of the trust,

  • (ii) all interests in expectancy of beneficiaries whose interests can be expressed in terms of a right to a certain amount or percentage of all or any part of the income of the trust,

  • (iii) all interests in possession of beneficiaries whose interests can be expressed in terms of a right to a certain amount or percentage of all or any part of the capital of the trust,

  • (iv) all interests in expectancy of beneficiaries whose interests can be expressed in terms of a right to a certain amount or percentage of all or any part of the capital of the trust,

  • (v) all discretionary interests of beneficiaries with respect to all or any part of the income of the trust, and

  • (vi) all discretionary interests of beneficiaries with respect to all or any part of the capital of the trust;

• (a.1) where a trust demonstrates to the Minister that the beneficial Canadian ownership of a class of formal equity of the trust does not accurately represent the beneficiaries’ interests in the capital or income of the trust, or any part thereof, the Minister may adjust the beneficial Canadian ownership accordingly;

• (b) subject to paragraph (c), each beneficiary of the trust shall be deemed to own a number of units of a particular class referred to in paragraph (a) determined in accordance with the formula

  (Av/Tv) × 100,

  calculated to two decimal places where

  • (i) Av is the value of the interest of the beneficiary represented in that class, and

  • (ii) Tv is the value of all beneficial interests constituting that class;

  • c) subject to paragraph (d), the beneficial Canadian ownership of a class of formal equity that comprises discretionary interests in a trust shall be equal to the lowest Canadian ownership rate of any of the beneficiaries whose discretionary interests constitute that class determined as if the words “rounded to the nearest whole number” in section 16 read “rounded to the nearest 10th of a percentage point” and, for greater certainty, subject to paragraph (f), if such beneficiaries include a person that has or may have a Canadian ownership rate of nil, whether or not the identity of that person can be ascertained, the beneficial Canadian ownership of the class shall be deemed to be nil;

  • d) the Canadian ownership rate of a trust shall be determined without regard to the existence of any discretionary power to consume, advance, appropriate, encroach upon or otherwise dispose of all or part of the capital or income of a trust to or for the benefit of any one or more individuals who have interests in that capital or income independently of the existence of the discretionary power, if the exercise of that power is limited by a determinable standard relating to the health, education, maintenance, support or comfort of such individual or individuals;

  • e) any possibility that one or more persons will subsequently acquire interests in property of the trust at birth, on adoption or on marriage shall be disregarded;

  • f) for the purposes of paragraph (b), the value of any income right, annuity, term of years, life interest or other similar estate and of any interest in expectancy shall be determined,

    • (i) where the income right, annuity, term of years, or other similar estate or the interest in expectancy does not depend on a life contingency, on the basis of compound interest at the designated rate of interest with annual rests, and

    • (ii) where the income right, annuity, term of years, life interest or other similar estate or the interest in expectancy depends on a life contingency, on the basis of compound interest at the designated rate of interest with annual rests and the standard of mortality set out in Table I of Schedule II;

  • g) Tables II, III and IV of Schedule II shall be used as far as they may be applicable for the purpose of determining the value of any income right, annuity, term of years, life interest or other similar estate or interest in expectancy;

  • h) for the purposes of paragraphs (f) and (g), the annual income from any property shall be deemed to be the product of the designated rate of interest and the value of the property;

  • i) for the purposes of paragraph (b), where the value of any interest in a trust depends on the happening of a contingency other than a life contingency, the value of the interest shall be determined on the basis that the contingency will not occur, except that, if the Minister is satisfied that the contingency is substantially within the control of a person who is not dealing at arm’s length with a beneficiary of the trust, the value of the interest shall, if the Minister so directs, be determined as if the contingency had already occurred;

  • j) for the purposes of paragraph (b), where the value of any interest in the trust depends on the happening of a contingency that the Minister is satisfied cannot reasonably be expected to occur, the value of the interest shall be determined on the basis that the contingency will not occur;

  • k) for the purposes of paragraph (b), where the value of a particular interest in a trust depends on the death of a beneficiary before attaining such age, not exceeding 40 years, as is specified in the trust instrument, and the particular interest of the beneficiary is an interest in possession, the value of that particular interest and the value of any other interest determined with reference to the value of that particular interest shall be determined as if that beneficiary will attain the age specified in the trust instrument; and

  • l) where each of the beneficiaries in whose favour a discretionary power may be exercised has a Canadian ownership rate of 100%, the Canadian ownership rate of the trust may, if the trust so elects, be determined without regard to the existence of that discretionary power.

Beneficial Canadian Ownership of Classes of Formal Equity of a Trust

• 49 (1) If the beneficial Canadian ownership of a class of formal equity of an applicant or of an investor that controls the applicant in any manner that results in control in fact, whether directly through the ownership of units or indirectly through a trust, contract, the ownership of units of any other entity, or otherwise, or that is a member of a group that so controls the applicant cannot be determined for the purpose of paragraph 48(b) without reference to the designated rate of interest, the beneficial Canadian ownership of that class shall be the lowest Canadian ownership rate of any of the beneficiaries whose interests constitute that class determined as if the words “rounded to the nearest whole number” in section 16 read “rounded to the nearest 10th of a percentage point”.

• (2) Subsection (1) does not apply to a trust that is an investor that would not have a direct or an indirect equity percentage in the applicant if all publicly traded classes of formal equity were disregarded in the measurement of direct or indirect equity percentage.

50 Where a trust certifies that each of the beneficiaries that has an interest in a trust is a person that has a Canadian ownership rate of 100%, the trust shall be considered to have a Canadian ownership rate of 100%.

Transitional Provisions

• 51 (1) Where a trust created before March 10, 1982 is an applicant or an investor and under the trust a discretionary power with respect to all or any part of the income or capital of the trust cannot be exercised in favour of any person other than

  • (a) one or more of the beneficiaries who have interests in that income or capital or in that part of the income or capital as the case may be, independently of the existence of the discretionary power,

  • (b) any individual related to any one or more of the beneficiaries referred to in paragraph (a), or

  • (c) a person obliged to make use of its interest in income or capital exclusively for charitable purposes,

  the trust may elect, in determining its Canadian ownership rate, that the existence of the discretionary power shall be disregarded in determining the Canadian ownership rate.

• (2) Notwithstanding any other provision of these Regulations, where a trust created before March 10, 1982 is an applicant or investor and the Minister is satisfied that, in the circumstances and when considering the terms and conditions of the trust, the main purpose of the trust is to provide for the benefit of any one or more individuals related to any individual from whose contributions of property to the trust made prior to March 10, 1982 more than 25% of the value of the capital of the trust shall be determined as if all interests of the beneficiaries in the trust constituted one class of formal equity of the trust consisting of 100 units and as if all the units of that class of formal equity were owned by the beneficiaries, other than any beneficiary excluded by the Minister for the purposes of this subsection equally or in such unequal shares as the Minister considers appropriate having regard to previous distributions, if any, made under the trust.

• (3) For the purposes of this section, where the terms of a trust have been amended or varied after March 9, 1982, regardless of whether such amendment or variation has been effected by virtue of a court order, an exercise of a power of amendment or variation conferred or reserved in the terms of the trust, an agreement of the beneficiaries or otherwise, the trust shall be deemed to have been created after March 9, 1982.

• (4) Subsection (3) does not apply to a trust that was created before March 10, 1982 and that was amended or varied after March 9, 1982 or was resettled after March 9, 1982 where the sole effect of such amendment, variation or resettlement was to require, either expressly or otherwise, that any beneficiary or member of a class of beneficiaries have a Canadian ownership rate of 100%.

• (5) For the purpose of this section,

  • (a) individuals are related to each other if each individual or the spouse of that individual is a lineal descendant, by birth or adoption, of a parent of an individual who is alive before a trust is created; and

  • (b) an individual is related to himself if that individual is a beneficiary of and a contributor of property to a trust.