In Scenario 1, Individuals A and B are related, and each owns 50 common shares of their employer (the “Employer”), which is a participating employer in a registered pension plan (“RPP”) containing defined benefit provisions. Individuals A and B are the only members of the plan. Scenario 2 is the same except that Individuals A and B are unrelated.
Is either individual related to the Employer for purposes of the “individual pension plan” definition in Reg. 8300(1).
Respecting Scenario 1, the Directorate stated:
Individual A and Individual B form a related group that controls the Employer and are both related to the Employer pursuant to paragraph 251(2)(b) … [so that] the definition of IPP … is satisfied.
Respecting Scenario 2:
[A]s is apparent from Duha, the determination of whether a person exercises de jure control … must also take into consideration whether any specific or unique limitation on a shareholder’s power to control the election of the board or the board’s power to manage the business and affairs of the company, is manifested in either the constating documents of the corporation, or any unanimous shareholder agreement.
Therefore, it is possible that … Individual A or Individual B could … possess de jure control of the Employer and be related to the Employer under subparagraph 251(2)(b)(i).
… If Individual A or Individual B possessed a right such that the individual would be deemed to own sufficient shares to control the Employer under paragraph 251(5)(b), then the individual would be related to the Employer under subparagraph 251(2)(b)(i).