51% and 49% of the taxpayer's shares (being common shares) were held by a business corporation ("Kruger") and a Government of Quebec corporation ("SGF").
Jorré J found that Kruger's shareholding had a fair market value of over 50% of that of all the shares, so that ss. 256(1.2)(c) and 256(1)(a) applied to deem the taxpayer to be associated with Kruger, stating (at para. 118):
Given the effect of paragraph 256(1.2)(g)… what one has to value is Kruger's holding of 51% of the shares with some expected financial return per share and SGF's holding of 49% of the shares with the same expected financial return per share in circumstances where it is as if a third party ran the appellant without Kruger or SGF having the slightest influence on that third party. In such circumstances, it is hard to imagine why someone would pay a different price per share whether they bought 49 shares, 51 shares or all 100 shares.
A unanimous shareholder agreement gave SGF the right, on its 9th anniversary, to require Kruger to purchase all of its shares for their FMV, determined without minority discount or marketability discount, provided that credit agreement covenants were met. Jorré J accepted that such a right might increase the value of SGF's shares relative to Kruger's. However, since the benefit of this put right could not be assigned to a third-party purchaser of SGF's shares, it did not affect the shares' FMV.
See summary under s. 256(1)(a).