If a controlling shareholder of a corporation becomes incapable and an unrelated person (or persons) starts acting on the shareholder’s behalf under a power of attorney, does that constitute a loss restriction event for the corporation, and would there be a further such event on a future change of attorney?
After indicating that an agreement that is not a unanimous shareholders agreement would not generally be considered in determining the de jure control of the corporation (except where the shares were held in trust), CRA stated that a power of attorney under which a designated attorney exercises the voting rights of a controlling shareholder of a corporation as a consequence of the incapacity of that shareholder who continues to be the legal and beneficial owner of those shares would not constitute an external document that has to be taken into consideration in determining the de jure control of the corporation. This confirmed the response in 2012 APFF Roundtable Q.17, 2012-0454111C6.
A power of attorney may be relevant in applying s. 251(5)(b) or s. 256(1.4),