CRA noted that 2008-0285241C6 “stresses that the clauses of a shareholders' agreement must not result in a reduction of the FMV of the freeze preferred shares.” In elaborating, CRA stated:
[A] clause in a shareholders agreement (unanimous or otherwise) results in a reduction in the FMV of the freeze preferred shares where such a clause provides inter alia that:
- The holder of the freeze preferred shares agrees not to redeem all of its shares at the same time;
- The holder of the freeze preferred shares undertakes not to request the redemption of the holder’s shares without the agreement of all shareholders of the corporation; or,
- The holder of the freeze preferred shares agrees to accept as payment for the redemption of the freeze preferred shares a term note that does not bear interest at a rate that in the circumstances is a reasonable commercial rate.