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Special rule relating to investment in foreign resident holding companies

             (1)  A company that meets the requirements of subsections 118-425(6) and (7) is treated as also meeting the requirements of subsections 118-425(2), (3), (4), (4A) and (5) if:

                     (a)  it is a resident of:

                              (i)  Canada; or

                             (ii)  France; or

                            (iii)  Germany; or

                            (iv)  Japan; or

                             (v)  the United Kingdom; or

                            (vi)  the United States of America; or

                           (vii)  any other foreign country prescribed by the regulations; and

                     (b)  it beneficially owns all the * shares in another company or all the units in a unit trust; and

                     (c)  it does not carry on any * business other than to support the primary activity of the other company or unit trust; and

                     (d)  the other company meets the requirements of subsections 118-425(2) to (7), or the unit trust meets the requirements of subsections 118-427(3) to (8), as the case requires.

             (2)  However, if:

                     (a)  the company is so treated as meeting those requirements; and

                     (b)  at any time within the period of 12 months after the day on which the first * eligible venture capital investment was made in the company:

                              (i)  the other company ceases to be an Australian resident; or

                             (ii)  the unit trust ceases to carry on * business in Australia;

                            as the case requires;


                     (c)  any eligible venture capital investments already made in the company or unit trust cease to be eligible venture capital investments; and

                     (d)  any further investments made in the company or unit trust are not eligible venture capital investments.

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