‘operating company’ means-
(a) any company that carries on business continuously, and in the course or furtherance of that business-
(i) provides goods or services for consideration; or
(ii) carries on exploration for natural resources;
[Paragraph (a) substituted by section 7 of Act 43 of 2014 effective on 1 January 2013]
(b) any company that is a controlling group company in relation to a company contemplated in paragraph (a);or
(c) any company that is a listed company;
‘redeem’, in relation to an instrument, means the discharge of all liability to pay all amounts in terms of that instrument.
‘enforcement right’ in relation to a share or equity instrument means any right, whether fixed or contingent, of the holder of that share or equity instrument or of any person that is a connected person in relation to that holder to require any person other than the issuer of that share or equity instrument to-
(a) acquire that share or equity instrument from the holder;
(b) make any payment in respect of that share or equity instrument in terms of a guarantee, indemnity or similar arrangement; or
(c) procure, facilitate or assist with any acquisition contemplated in paragraph (a) or the making of any payment contemplated in paragraph (b);
[Definition of ‘enforcement right’ substituted by section 15 of Act 15 of 2016 effective on 1 January 2017, applies in respect of years of assessment ending on or after that date]
‘issue’, in relation to an instrument, means the creation of a liability to pay an amount in terms of that instrument;
(2) Any dividend or foreign dividend received by or accrued to a person during any year of assessment in respect of a share or equity instrument must be deemed in relation to that person to be an amount of income accrued to that person if that share or equity instrument constitutes a hybrid equity instrument at any time during that year of assessment.
[Subsection (2) substituted by section 14 of Act 15 of 2016 effective on 1 January 2017, applies in respect of years of assessment ending on or after that date]
(2A) Where any share or preference share that was issued in terms of an agreement, all the terms of which were finally agreed to before 1 April 2012 by all the parties to that agreement, constitutes a hybrid equity instrument solely by reason of a right of redemption or a security arrangement acquired in accordance with the terms of that agreement and that right or arrangement is cancelled on or after 26 October 2016 and on or before 31 December 2017-
(a) the provisions of subsection (2) will not apply in respect of any dividend or foreign dividend that accrues in respect of that share after the date of cancellation of that right or arrangement; and
(b) the cancellation of that right or arrangement must not be treated as a disposal of that share if no consideration is payable in respect of that cancellation.
[Subsection (2A) inserted by section 14 of Act 15 of 2016 effective on 19 January 2017]
(1) For the purposes of this section-
‘enforcement obligation’...
[Definition of “enforcement obligation” substituted by section 15(1)(a) of Act 15 of 2016 and deleted by section 9(a) of Act 34 of 2019]
‘instrument’ means any form of interest-bearing arrangement or debt that is issued by-
(a) a company that is a resident;
(b) a company that is not a resident if the interest in respect of that instrument is attributable to a permanent establishment of that company in the Republic; or
(c) a company that is a controlled foreign company as contemplated in section 9D if the interest incurred in respect of that instrument must be taken into account in determining the net income of that controlled foreign company as contemplated in that section;
[Definition of ‘instrument’ substituted by section 16 of Act 15 of 2016 effective on 24 February 2016, applies in respect of amounts incurred in respect of an instrument on or after that date]
8E. Dividends derived from certain shares and equity instruments deemed to be income in relation to recipients thereof
[Heading of section 8E substituted by section 14 of Act 15 of 2016 effective on 1 January 2017, applies in respect of years of assessment ending on or after that date]
‘hybrid debt instrument’ means any instrument in respect of which a company owes an amount during a year of assessment if in terms of any arrangement as defined in section 80L-
(a) that company is in that year of assessment entitled or obliged to-
(i) convert that instrument (or any part thereof) in any year of assessment to; or
(ii) exchange that instrument (or any part thereof) in any year of assessment for,
shares unless the market value of those shares is equal to the amount owed in terms of the instrument at the time of conversion or exchange;
(b) the obligation to pay an amount so owed on a date or dates falling within that year of assessment has been deferred by reason of that obligation being conditional upon the market value of the assets of that company not being less than the amount of the liabilities of that company; or
[Paragraph (b) substituted by section 16 of Act 15 of 2016 effective on 1 January 2016, applies in respect of years of assessment commencing on or after that date]
(c) that company owes the amount to a connected person in relation to that company and is not obliged to redeem the instrument, excluding any instrument payable on demand, within 30 years from the date of issue of that instrument;
[Words and subparagraphs preceding the proviso substituted by section 9 of Act 25 of 2015 effective on 1 January 2016]
Provided that, for the purposes of this paragraph, where the company has the right to-
(aa) convert that instrument to; or
(bb) exchange that instrument for,
a financial instrument other than a share-
(A) that conversion or exchange must be deemed to be an arrangement in respect of that instrument; and
(B) that instrument and that financial instrument must be deemed to be one and the same instrument for the purposes of determining the period within which the company is obliged to redeem that instrument;
‘qualifying purpose’ means a qualifying purpose as defined in section 8EA(1).