Canadian Ownership and Control Determination Regulations, 1984 (SOR/84-431)
Full Document:
Regulations are current to 2024-11-26
PART IIICanadian Ownership Rates other than Specified Rates and Rates of Insurance Companies and Trusts (continued)
Unissued Units Deemed Issued and Outstanding (continued)
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
[B + (0.5 × U2) + M + S] / (T - U1)
expressed as a percentage rounded to the nearest tenth of a percentage point, where
a) B is the sum of
(i) the products obtained when the number of units owned by each owner of units in a measured block, other than market-maker shares or units described in subparagraph (ii), is multiplied by the Canadian ownership rate of the owner, and
(ii) the products obtained when the number of shares, if any, referred to in subsection 21(1) is multiplied by the Canadian ownership rate required of a purchaser of those shares referred to in that subsection;
b) S is the aggregate number of units that do not form part of a measured block and that are shown on the revised unit holders list as registered in the name of a person with an address in Canada or that are referred to in an entry included on the revised unit holders list pursuant to paragraph 4(1)(d);
c) M is the number of units that are market-maker shares;
d) U2 is the number of units deemed pursuant to subsection 26(2) to be owned by an investor who has a Canadian ownership rate of 50%;
e) T is the sum of
(i) the total number of units in the class of formal equity shown on the unit holders list,
(ii) the greater of
(A) the aggregate number of units
(I) certified by each recorded owner as owned by a person or held for a person, or
(II) certified by any other person as owned by a person or held for a person where any of the units so certified are contained in an entry included in the revised unit holders list pursuant to paragraph 4(1)(c), (d) or (e),
less
(III) 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 subclause (I), and
(B) nil units, and
(iii) the greater of
(A) nil units, and
(B) the aggregate of the numbers of units referred to in paragraph (a) less the number of units in all measured blocks; and
f) U1 is the lesser of
(i) the total number of units in the street share pool as defined in subsection 26(1), and
(ii) 5% of the number of units of the class of formal equity shown on the unit holders list of the applicant or investor.
- SOR/85-847, s. 10
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.
- SOR/85-847, s. 11
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%.
- SOR/85-847, s. 12
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%.
- SOR/85-847, s. 13
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.
- SOR/85-847, s. 14
- Date modified: