Background
The shares (being preferred and common shares) of DC, whose assets (other than minor cash) consisted solely of publicly-traded shares, were held equally by three adult siblings. DC had no liabilities, and positive ERDTOH and GRIP, and nil NERDTOH and CDA, balances.
Proposed transactions
- DC’s articles will be amended to change all of the DC preferred shares into DC common shares.
- Siblings 1 and 2 will each transfer his DC common shares on a s. 85(1) rollover basis to TC1 and TC2, respectively (each incorporated by the respective Sibling for one common share) solely in consideration for TC1 or TC2 common shares.
- DC will contemporaneously transfer, on a s. 85(1) rollover basis, 1/3 of each of its types of property (investment, and cash, property) in consideration solely for non-voting redeemable retractable special shares to each of TC1 and TC2.
- Each TC will purchase for cancellation its special shares for a note (which it will have the financial capacity to honour), accepted by DC as full payment.
- DC will purchase for cancellation its common shares held by each TC for a note, accepted by the TC as full payment.
- DC will designate, a portion of the taxable dividend arising from the purchases for cancellation in 5 to be eligible dividends by notifying TC1 and TC2, respectively, in writing, within the s. 89(14) time limit.
- The notes will be set-off.
Rulings
Including re ss. 129(1.2), 55(2) and 55(2).