| November 7, 1990 | |
| Mr. R.G. D'Aurelio | Bilingual Services |
| Director | Section |
| Current Amendments and | M. Ton-That |
| Regulations Division | 957-8972 |
| 5-902218 |
SUBJECT: Meaning of "unpaid dividends" in 256(1.1) and "accrued and unpaid dividends" in 191(4)
In the context of a Revenue Canada round table presented at the 24(1) at the beginning of October, 1990, we have been asked whether "unpaid dividends" in subsection 256(1.1) could be interpreted as including accumulated and unpaid dividends. Also, does it have the same meaning as "accrued and unpaid dividends" in subsection 191(4).
Our Position
The term "unpaid dividends" used in subsection 256(1.1) would refer to dividends provided in the share legal rights to be paid upon the redemption or repurchase of the share. As such, it would include declared and unpaid dividends or accumulated, undeclared and unpaid dividends.
It would have the same meaning as "accrued and unpaid dividends" under 191(4).
Please note that, in the majority of corporations' certificates of constitution, the share legal rights would provide for the payment upon redemption, repurchase or liquidation, of an amount equal to the consideration for which the share has been issued and any amount of dividends declared and not paid.
21(1)(b)
R.J.L. ReadDirector GeneralRulings DirectorateLegislative and Intergovernmental Affairs Branch