23 June 2010 Internal T.I. 2010-0368161I7 F - 84.1 -- summary under Paragraph 84.1(2.2)(b)

Three individuals (A, B, and C) each held 1/3 of the shares of Holdco, and Holdco and another individual, D, each held ½ of the shares of Opco. D transferred D’s Opco shares to Holdco in consideration for a non-voting preferred share and a note. Would D be part of a group of persons described in s. 84.1(2.2)(b)? The Directorate responded:

[S]ince paragraph 84.1(2.2)(b) … refers only to "shares", a person who holds only non-voting shares and another person who holds voting shares may indeed form a group of persons within the meaning of paragraph 84.1(2.2)(b) and for the purposes of applying paragraph 84.1(2)(b). In this regard, we refer you, among others, to the following Technical Interpretations: F9406355 and E9305575.

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