Regarding a subscription for shares of its subsidiary by M Co, the Directorate stated:
If M Co pays more for the shares than their fair market value ("FMV"), it would be deemed by paragraph 69(1)(a) to have acquired them at that FMV. In that case, the reduction in the cost to M Co of acquiring the shares under paragraph 69(1)(a) could constitute a capital contribution by M Co for the purposes of paragraph 53(1)(c).