Where a private corporation (Acquisitionco) acquires all of the shares of a publicly-listed target (Targetco), the designated stock exchange often takes several days to formally delist the purchased shares. Prior to such delisting, can Targetco make a valid election not to be a public corporation under s. (c)(i) of the public corporation definition at a time when Acquisitionco owns 100% of Targetco so that, following the amalgamation of Acquisitionco and Targetco, Amalco would not be considered to be a public corporation?
CRA noted that if Targetco meets the prescribed conditions and makes an election before the amalgamation, it will be excluded under (c)(i), but will still be a public corporation under s. (a) while its listing continues.
However, the fact that the shares of a public corporation no longer exist at the time of making an election would not preclude the insider requirement from being met. Accordingly, in those situations where Amalco makes an election after the time that Targetco shares are delisted, Amalco will not be considered to be a public corporation. CRA will continue to rule on a case-by-case basis as to whether the prescribed conditions in (c)(i) of the “public corporation” definition, and in Reg. 4800(2), will be met where shares of a public corporation no longer exist.