Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) In working out whether the requirements in subsection 125 - 70(2) are met, disregard each of the * ownership interests described in subsections (2) and (3) if, just before the * demerger, those interests (taking into account either or both of their number and value) represented not more than 3% of the total * ownership interests in the entity.
(2) An * ownership interest, in a company, that is owned by an entity is disregarded under subsection (1) if:
(a) the entity acquired a beneficial interest in the ownership interest under an * employee share scheme; and
(b) these provisions apply to the beneficial interest:
(i) Subdivision 83A - B and the provisions referred to in paragraphs 83A - 33(1)(a) to (c); or
(ii) Subdivision 83A - B and the provisions referred to in paragraphs 83A - 35(1)(a) and (b); or
(iii) Subdivision 83A - C; and
(c) the ownership interest is not a fully - paid ordinary * share.
(3) An * ownership interest, in a trust, that is owned by an entity is disregarded under subsection (1) if:
(a) both of the following would apply if Division 83A (about employee share schemes) applied to ownership interests in trusts in the same way as it applies to * shares:
(i) the entity acquired a beneficial interest in the ownership interest under an * employee share scheme;
(ii) the provisions referred to in subparagraph (2)(b)(i), (ii) or (iii) apply to the beneficial interest; and
(b) the ownership interest is not a fully - paid unit.
Adjusting instruments
(4) In working out whether the requirements in subsection 125 - 70(2) are met, disregard each of the * ownership interests described in subsection (5) ( adjusting instruments ) if, just before the * demerger, those interests represented not more than 10%, or such greater percentage (not exceeding 17%) as is prescribed, of the ownership interests in the entity.
(5) An * ownership interest in a * listed public company or a * listed widely held trust that is the * head entity of a * demerger group is disregarded under subsection (4) if:
(a) the adjusting instrument was issued on terms that ensure that its value is not adversely affected by an * arrangement undertaken by the company or trust in relation to other ownership interests in the company or trust; and
(b) if the adjusting instrument can be converted into an ordinary * share in the company or an ordinary unit in the trust, any conversion will occur on a basis:
(i) that is set out in the terms of the issue of the instrument; and
(ii) that is adjusted to take into account a capital reduction or a capital reconstruction; and
(c) before conversion, the owner of the adjusting instrument does not have a right to participate in distributions of profit or capital except as set out in the terms of the issue of the instrument; and
(d) the adjusting instrument deals with the effect of a * demerger that happens to the demerger group on the value of the instrument.
Example: Some examples of adjusting instruments are:
• convertible preference shares, including reset preference shares;
• convertible notes;
• partly paid shares where the paid - up amount is adjusted to reflect a capital reduction.
Additional exceptions
(6) The regulations may provide that, in working out whether the requirements in subsection 125 - 70(2) are met, other * ownership interests of a kind specified in the regulations are to be disregarded if, just before the * demerger, those interests represented not more than a prescribed percentage of the ownership interests in the entity.
(7) However, the total percentage of * ownership interests to be disregarded under this section must not exceed 20% of the ownership interests in the entity.