The answer to that gets a little technical in places.
Essentially, for equity capital raised by Canadian subsidiaries of foreign multinationals, if equity capital is raised to invest in foreign affiliates of those Canadian subsidiaries, then there's a relatively certain and simple mechanism to avoid the application of the rule. The reason for this particular measure is that most reasonable people will agree that there's no Canadian tax benefit if Canadian equity capital is raised and it's used to fund investments in foreign affiliates. This rule is earmarked primarily at borrowings in Canada where borrowed money is used to invest in foreign affiliates. That's the main measure.
An alternative mechanism has also been provided since the budget. This came out of consultations post-budget whereby Canadian subsidiaries can lend money to their foreign affiliates. They can elect into a system whereby they are required to impute income at a particular interest rate, and that's consistent with the base protection objective of the measure.
Finally, and this was announced as part of the budget package, there is a provision for a strategic business expansion. This is intended to look at a Canadian subsidiary and determine whether its profile and conduct is similar to that of a Canadian-based multinational. If it's undertaking a legitimate strategic business expansion through its foreign affiliates, then it would be excepted from this rule.