Category Archives: Corporations

Why Multiple Classes?

I am sometimes asked whether investors who propose to subscribe for shares in the capital of a corporation that has been operating for some time should acquire shares of a separate class. I’ve written a memo that attempts to describe … Continue reading

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84.1 Gotcha

Assume that A and B, who deal at arms length, own 55 and 20 common shares in the capital of Opco respectively. A and B also own 95 and 5 common shares in the capital of Holdco respectively. Assume that … Continue reading

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Famliy Members as Directors

I’ve seen a number of cases where a family member consents to be a director of a corporation—exactly why nobody seems to know after the fact—and then ends up being assessed for unremitted source deductions. The family member might be … Continue reading

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Triangles

Don’t forget the triangular amalgamation. While these types of amalgamations are more typical in the public company context, they can be a useful tool for private company deals too.

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Eligible Dividends

Last week, I gave a presentation for the Hamilton Law Association on eligible dividends at its annual Corporate Commercial update. You can find a copy of a sample resolution for eligible dividends here. Use at your own risk!

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Freeze Shares

The following article appeared in the latest edition of the Hamilton Law Association Law Journal.

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Valuation redux

In a post I wrote about a year ago, I complained about the CRA’s then-recent pronouncements on control premiums. The CRA, at the most recent Canadian Tax Foundation BC Conference, recanted this position, at least in part, as follows:

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Offsetting Shareholder Benefits

In Coutre v. The Queen, 2009 TCC 456, the taxpayer tried to argue that, if an assessment under subsection 15(1) is made against a shareholder, then the Minister, to prevent double taxation, must reduce the benefit by the amount of … Continue reading

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Loss Utilization That Doesn't Work

Consider the position of Lossco and Profitco, each a wholly-owned sub of Parentco, where one has non-capital losses in a year equal to the taxable income of the other in that same year. Between them, they have not earned profits, … Continue reading

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Paying dividends with a note

In a post I wrote last year, I stated According to the CRA, it is not necessary to use cash to pay the dividend. A corporation can pay a dividend using a note, but the payee must accept the note … Continue reading

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