Parent, a listed corporation with a specified shareholder (and perhaps with two classes of multiple voting and single voting shares), wishes to spin off one of its subsidiaries, whose shares are held, in part, through a subsidiary of Parent (Sub1) and partly by Parent directly. CRA provided butterfly and other ruling on two successive spin-off butterflies pursuant to which Sub1 spins-off its shares of the subsidiary to Parent, then Parent drops all of its shares of the subsidiary into a Newco which then is spun-off to its shareholders.
In addition:
- Employee stock options continues to apply only to the shares of Parent, but with a reduced exercise price to reflect the valuation impact of the spin-off, such that the s. 7(1.4) rollover would apply.