During the relevant taxation years of Corporation A (which had claimed the small business deduction), its shares were held equally by Corporation B (a resident corporation) and Corporation D, which were the two parties to a unanimous shareholder agreement. All of the shares of Corporation D were held by Corporation E, a non-resident corporation of Canada.
In finding that Corporation A was not a Canadian-controlled private corporation by virtue of the de jure control of Corporation E, the Directorate relied on the future right of Corporation D under the USA to acquire all the shares of Corporation A.