16 March 2011 External T.I. 2010-0380571E5 F - Application de 251(5)b)(ii) et 256(1.4)b) -- summary under Paragraph 256(1.4)(b)

The wording of ss. 251(5)(b)(ii) and 256(1.4)(b) is sufficiently broad to cover a situation where a person does not have control over the triggering event giving him or her the right to cause the corporation to redeem, acquire, or cancel shares in its capital stock held by another person. CRA has ruled that these provisions would not generally apply where a corporation is required to redeem or purchase for cancellation shares held by a shareholder who has been found guilty of fraud in relation to the corporation (see 2002-0172315 and 2006-0167361E5).