Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
APFF - 1995
Question 33
Share classes
This question deals with the existence of separate classes of shares when share features are identical. For example, OPCO, incorporated under Part 1A of the Companies Act, could issue Class A common shares to Mr. A and Class B common shares to Ms. B--shares that are voting, participating and identical in all other respects. Does Revenue Canada consider that these are the same class for purposes of the Income Tax Act? The answer will impact such things as the calculation of the paid-up capital under subsection 89(1) of the Act or the holding of at least 25% of the issued shares in a class for purposes of subsection 256(1) dealing with associated corporations.
Answer by the Department of Revenue
This is a corporate law issue on which there does not appear to be unanimity. Also, it seems possible that the result is not the same in all jurisdictions, depending on the applicable law. If the shares issued to Mr. A and the shares issued to Ms. B have exactly the same features and can belong to separate classes under the corporate law applicable to the corporation (which we doubt), they will be considered to be separate classes. Otherwise, they would be considered to be of the same class.
Note that if there were two series of shares in the class, the calculation of the paid-up capital under subparagraph 89(1)(b)(iii) of the Act should be done by substituting the words “series of the class” for “class” under subsection 248(6) of the Act.