A corporation (the DLCC), which had been operating a club for the purposes of pleasure and recreation of the members and of the community was, as a result of the repeal of its governing Act (the “DLCC Act”), continued under a Corporations Act as a non-share capital corporation, so that the DLCC shares were exchanged for membership interests.
After indicating that such conversion would not cause a share disposition if no shares were cancelled and the rights of the shareholders were not substantively altered, CRA went on to indicate that if there otherwise was a disposition, s. 51 would not apply, stating:
… 2013-0473771E5 … confirmed that a person who has a membership interest in a non-share capital corporation would not be considered to hold a share in that corporation. Accordingly, in cases involving the conversion of a share to a membership interest in a non-share capital corporation, section 51 does not appear to have any application.