‘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;