Section EX 6 — Income Tax Act 2007: Direct control interests include options and similar rights

EX 6 Direct control interests include options and similar rights Entitlement to acquire or extinguish (1) For the purposes of section EX 5 , a person is treated as holding something if they are entitled to acquire it or extinguish it. Entitlement arises in various ways (2) A person is entitled to acquire or extinguish something if the entitlement is absolute or contingent and whether the entitlement— (a) arises under a company’s constitution; or (b) arises under the terms of an option; or (c) arises under the terms of a convertible note; or (d) arises under the terms of any arrangement substantially similar to any of those described in paragraphs (a) to (c); or (e) arises in some other way. Standard security arrangements (3) Despite subsections (1) and (2), a person is not treated as being entitled to acquire something if— (a) the entitlement arises under a security arrangement; and (b) the person acquired the security arrangement in a transaction entered into on an arm’s length basis; and (c) the security arrangement’s terms conform to generally accepted commercial practice. No double counting (4) Despite subsections (1) and (2), for the purpose of determining whether a foreign company is a CFC, each of the percentage holdings described in section EX 5 may be counted only once. Defined in this Act: arrangement , CFC , company , convertible note , direct control interest , foreign company , security arrangement , Compare: 2004 No 35 s EX 6