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An individual will be treated as a genuine investor in a private company where:
- an actual injection of capital or equity has been made,
- the person who made the capital injection is not an attributable stakeholder of the company,
- the person receives shares in the company commensurate with the amount of capital injection,
- the person has a right to capital upon wind-up commensurate with the total capital injection,
- the person has a right to dividends reasonably commensurate with the total capital injection,
- the person is over 18 years of age at the time the capital injection was made, and
- in the opinion of the delegate, the injection of capital was genuine.
A genuine injection of capital in return for equity in a private trust can only occur where the trust is a fixed trust, and the person obtains units in return for the injection of capital. Genuine investors have the historical value of the injected equity capital assessed as their asset.
According to section 52ZZJ of the VEA, a person is an attributable stakeholder if a company or trust is a controlled private company or trust in relation to the individual unless the Commission determines otherwise.
Units in relation to a trust, include a beneficial interest, however described, in the property or income of the trust.
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