Proposed Transactions
Holdco (resident in Canada) transfers a portion of its shares of a Netherlands private limited liability company (“BV”) to a newly-incorporated Canadian subsidiary (“Newco”) under s. 85(1), following which BV is converted to a Dutch cooperative (“DC”), as a result of which all the shares of BV are cancelled and Holdco and Newco automatically become members of DC holding membership interests in proportion to their previous respective shareholdings. The parent of Holdco (“Canco”) then transfers shares of directly-held foreign affiliates (“FAs”) to Holdco in consideration for Holdco shares, and Holdco then transfers such FA shares to DC (and to Newco under s. 85(1)) in consideration for an increase to its membership interest in DC by an amount equal to the FMV of such transferred shares (and for the issuance of Newco shares – with Newco then dropping down its FA shares to DC in consideration for a correlative increase in its membership interest).
Rulings
Including that Holdco and Newco are each considered to own shares of DC in the indicated respective proportions, and that s. 85.1(3) will apply to their respective drop-down transactions on the basis that they received treasury shares of DC.