I-3 - Taxation Act

Section 1049.2.2.5.1 Disposition versions

2017-12-07

1049.2.2.5.1. (Repealed).

1992, c. 1, s. 188; 1997, c. 3, s. 71; 1997, c. 85, s. 278; 1999, c. 83, s. 228; 2017, c. 29, s. 201.

2006-03-01

1049.2.2.5.1. Where a particular corporation has issued a qualifying non-guaranteed convertible security, within the meaning of paragraph j.5 of section 965.1, that may be redeemed or repaid by the particular corporation or purchased by anyone in any manner whatever, under the conditions pertaining to its issue, and, at a particular time before the maturity date of the security or, if there is none, before the date that is 1,825 days after the date of its issue, the security, referred to in this section as a “reference security”, or an accepted security, is either replaced by a security other than an accepted security, or redeemed or repaid by the particular corporation or, where the accepted security has been issued by another corporation, by the other corporation, or purchased by anyone in any manner whatever, the particular corporation, or the other corporation, as the case may be, incurs, in respect of the reference security or the accepted security, as the case may be, except in the case provided for in the fourth paragraph, a penalty equal to the amount determined in its respect under the second paragraph.

The amount of the penalty prescribed in the first paragraph in respect of a reference security or an accepted security, as the case may be, is equal to the amount determined in its respect by the formula

(A × B × C) + (A × B × C × D × E).

For the purposes of the formula set forth in the second paragraph,

(a)  A is

i.  12%, where the reference security is referred to in section 965.6.0.5, other than a security to which subparagraph ii applies, or in paragraph a of that section as that paragraph read before being struck out, or where the accepted security would be referred to therein had it been issued by the particular corporation referred to in the first paragraph at the same time as the reference security, and in its place, as the case may be, or

ii.  6%, where the reference security is referred to in paragraph b of section 965.6.0.5, as that paragraph read before being struck out, or where the accepted security would be referred to therein had it been issued by the particular corporation referred to in the first paragraph at the same time as the reference security, and in its place, as the case may be;

(b)  B is the fraction represented by the ratio between, on the one hand, the number of qualifying non-guaranteed convertible securities, within the meaning of paragraph j.5 of section 965.1, issued as part of the non-guaranteed convertible security issue to which the reference security relates, the custody of which has been entrusted to a dealer under a stock savings plan, which number must correspond to the fraction indicated to that effect by the particular corporation referred to in the first paragraph, in accordance with section 965.24.1.3, at the particular time referred to in the first paragraph, and, on the other hand, the total number of such qualifying non-guaranteed convertible securities issued as part of the non-guaranteed convertible security issue;

(c)  C is the par value of the reference security or, where this section applies in respect of an accepted security issued as part of an issue of several accepted securities as a replacement for a reference security, the result obtained by dividing that par value by the number of such accepted securities so issued, referred to in this paragraph as the “new par value”, or, where this section applies in respect of an accepted security issued as part of an issue of several securities in substitution for such a security so issued, the result obtained by dividing the new par value by the number of such accepted securities so issued;

(d)  D is the rate that would be calculated in accordance with section 1129.8 in respect of the non-guaranteed convertible security issue as part of which the reference security was issued if the said section were read as though the reference therein to subparagraph d of the second paragraph of section 1129.7 were a reference to this subparagraph;

(e)  E is the number of full calendar years included in the period beginning on 1 January in the year following that in which the receipt for the final prospectus pertaining to the non-guaranteed convertible security issue as part of which the reference security was granted and ending on the date that includes the particular time referred to in the first paragraph.

The first paragraph does not apply in respect of a reference security or an accepted security where, under the conditions pertaining to its issue, the consideration received by the holder of the security at the time of redemption, repayment or replacement consists only in shares identical, as to the number and the terms and conditions, rights or other characteristics attached thereto, to those the holder would have obtained in exercising the conversion right conferred on the holder by the security.

1992, c. 1, s. 188; 1997, c. 3, s. 71; 1997, c. 85, s. 278; 1999, c. 83, s. 228.