Mr. X sells all the shares of Holdco, which holds all the shares of Opco 1 and Opco 2, to Buyco, which is at arm's length. He grants a non-compete covenant to Buyco respecting the business of each of Opco 1 and 2.
Before indicating that the exception in s. 56.4(3)(c) was not available, CRA stated (Tax Interpretations translation) that s. (c) of the definition of "eligible interest" did not extend to the situation where 90% or more of the shares of a corporation was "attributable to eligible interests in two other corporations."