359.1R3.1. For the purposes of the first paragraph of section 359.1 of the Act, a new right to acquire a share of the capital stock of a corporation is a prescribed right if, at the time the right is issued,(a) the amount, determined by way of a formula or otherwise, that the holder of the right is entitled to receive in respect of the right on the dissolution, liquidation or winding-up of the corporation or on the redemption, acquisition or cancellation of the right by the corporation or by a specified person in relation to the corporation, referred to in this chapter as the “liquidation entitlement” of the right, may reasonably be considered to be fixed, limited to a maximum or established to be not less than a minimum;
(b) the right is convertible or exchangeable into another security issued by the corporation, unlessi. it is convertible or exchangeable only into a property that is a share of the corporation, referred to in this subparagraph and in subparagraph ii as a “particular share”, that, if issued, would not be a prescribed share, another right, including a right conferred by a warrant that, if it were issued, would not be a prescribed right and that, if it were exercised, would allow the person exercising it to acquire only a share of the corporation that, if the share were issued, would not be a prescribed share, or both a particular share and such a right, and
ii. all the consideration receivable by the holder on the conversion or exchange of the right is the particular share, the right described in subparagraph i, or both the particular share and such a right;
(c) any person or partnership has, either absolutely or contingently, an obligation, either immediately or in the future, other than an excluded obligation in relation to the right, to provide assistance, to make a loan or payment, to transfer property, or to otherwise confer a benefit by any means whatever, including the payment of a dividend, and that obligation may reasonably be considered to be, directly or indirectly, a repayment or return by the corporation or a specified person in relation to the corporation of all or part of the consideration for which the right was issued or for which an interest in the partnership that acquires the right was issued;
(d) any person or partnership has, either absolutely or contingently, an obligation, other than an excluded obligation in relation to the right, to effect any undertaking, either immediately or in the future, with respect to the right or the agreement under which the right is issued, including any guarantee, security, indemnity, covenant or agreement and including the lending of funds to, or on behalf of, the holder of the right or, where the holder is a partnership, to a member thereof or to a specified person in relation to the holder or a member of the partnership, as the case may be, or the placing of amounts on deposit with, or on behalf of, such holder, member or person, that may reasonably be considered to have been given to ensure, directly or indirectly, thati. any loss that the holder of the right and, where the holder is a partnership, a member thereof or a specified person in relation to the holder or a member of the partnership, as the case may be, may sustain by reason of the holding, ownership or disposition of the right or any other property is limited in any respect, or
ii. the holder of the right and, where the holder is a partnership, a member thereof or a specified person in relation to the holder or a member of the partnership, as the case may be, will derive earnings by reason of the holding, ownership or disposition of the right or any other property;
(e) the corporation or a specified person in relation to the corporation, within 5 years after the date the right is issued, may reasonably be expectedi. to acquire or cancel the right in whole or in part otherwise than on a conversion or exchange of the right that meets the conditions set out in subparagraphs i and ii of paragraph b or otherwise than as a consequence of an amalgamation of a subsidiary wholly-owned corporation, a winding-up of a subsidiary wholly-owned corporation to which section 556 of the Act applies, or the payment of a dividend by a subsidiary wholly-owned corporation to its parent, or
ii. to make a payment, transfer or other transaction, directly or indirectly, otherwise than pursuant to an excluded obligation in relation to the right, by way of a dividend, loan, purchase of rights, financial assistance to any purchaser of the right or, where the purchaser is a partnership, a member thereof, or in any other manner whatever, that may reasonably be considered to be a repayment or return of all or part of the consideration for which the right was issued or for which an interest in the partnership that acquires the right was issued;
(f) any person or partnership may reasonably be expected to respect, within 5 years after the date the right is issued, any undertaking which, if it were in force at the time the right was issued, would cause the right to be a prescribed right by reason of paragraph d;
(g) it may reasonably be expected that, within 5 years after the date the right is issued,i. any of the terms or conditions of the right or any existing agreement relating to the right or its issue will be modified in such a manner that the right would be a prescribed right if it had been issued at the time of the modification, or
ii. any new agreement relating to the right or its issue will be entered into in such a manner that the right would be a prescribed right if it had been issued at the time the new agreement is entered into; or
(h) it may reasonably be expected that the right, if exercised, would allow the person exercising the right to acquire a share in a corporation that, if that share were issued, would be a prescribed share within 5 years after the day the right was issued.