Eastern Daylight Saving Time, June 18, 1987 where
(a)a person or partnership (in this subsection and subsection (2.21) referred to as the “guarantor”) that is a specified financial institution or a specified person in relation to a specified financial institution, but that is not the issuer of the share or an individual other than a trust, is, at or immediately before the time the dividend was received, obligated, either absolutely or contingently and either immediately or in the future, to effect any undertaking (in this subsection and subsections (2.21) and (2.22) referred to as a “guarantee agreement”), including any guarantee, covenant or agreement to purchase or repurchase the share and including the lending of funds to or the placing of amounts on deposit with, or on behalf of, the particular corporation or any specified person in relation to the particular corporation given to ensure that
(i)any loss that the particular corporation or a specified person in relation to the particular corporation may sustain by reason of the ownership, holding or disposition of the share or any other property is limited in any respect, or
(ii)the particular corporation or a specified person in relation to the particular corporation will derive earnings by reason of the ownership, holding or disposition of the share or any other property; and
(b)the guarantee agreement was given as part of a transaction or event or a series of transactions or events that included the issuance of the share.
Marginal note:Exceptions
(2.21)Subsection (2.2) does not apply to a dividend received by a particular corporation on
(a)a share that is at the time the dividend is received a share described in paragraph (e) of the definitionterm preferred sharein subsection 248(1);
(b)a grandfathered share, a taxable preferred share issued before December 16, 1987 or a prescribed share;
(c)a taxable preferred share issued after December 15, 1987 and of a class of the capital stock of a corporation that is listed on a designated stock exchange where all guarantee agreements in respect of the share were given by one or more of the issuer of the share and persons that are related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the issuer unless, at the time the dividend is paid to the particular corporation, dividends in respect of more than 10 per cent of the issued and outstanding shares to which the guarantee agreement applies are paid to the particular corporation or the particular corporation and specified persons in relation to the particular corporation; or
(d)a share
(i)that was not acquired by the particular corporation in the ordinary course of its business,
(ii)in respect of which the guarantee agreement was not given in the ordinary course of the guarantor’s business, and
(iii)the issuer of which is, at the time the dividend is paid, related (otherwise than because of a right referred to in paragraph 251(5)(b)) to both the particular corporation and the guarantor.
Marginal note:Interpretation
(2.22)For the purposes of subsections (2.2) and (2.21),
(a)where a guarantee agreement in respect of a share is given at any particular time after 8:00 p.m