2014-0532201R3 Corporate reorganization

Principal Issues: (1) Whether the provisions of subsection 85(1) will apply to the transfers of property to be undertaken under the Proposed Transactions; (2) Whether subsection 74.4(2) will apply to the individual transferors having transferred property to the XXXXXXXXXX; (3) Whether subsection 84(3) will apply to the cancellation of the Newco XXXXXXXXXX Non-Voting Preference Shares in the course of the Wind-Up; (4) Whether the GAAR will apply to the Donation to deny the application of paragraph 38(a.1) and limit the inclusion to Holdco 3’s CDA.

Position: (1) Yes (2) No (3) No (4) No

Reasons: (1) The transferred property in each of the proposed transactions, which qualifies as an eligible property as that term is defined in paragraph 85(1.1)(a), was transferred to a taxable Canadian corporation; (2) None of the proposed transfers of property reduce the income of the individual transferor or benefit a designated person in respect of the individual; (3) No amount has been paid by Newco to Amalco XXXXXXXXXX to cancel the Newco XXXXXXXXXX Non-Voting Preference Shares.

Author: XXXXXXXXXX
Section: 38(a.1), 89(1), 74.4(2), 74.5(5), 85(1), 87(1), (4) and (7), 88(1)(a) and (b), 89(1) Capital Dividend Account, 110.1 , 245(2), 248(1) Specified Shareholder, 251(1) and (6)

XXXXXXXXXX
                                                            2014-053220

Attention: XXXXXXXXXX

XXXXXXXXXX, 2015

Dear Sir,

Re:   Advance Income Tax Ruling
         XXXXXXXXXX

This is in reply to your letter in which you requested an advance income tax ruling on behalf of the above-referenced taxpayer (“Rulings Request”).  The information that you provided in the Rulings Request and our email correspondence only forms part of this letter to the extent described herein.  

To the best of your knowledge and that of the above-referenced taxpayer, none of the issues raised in the Rulings Request is:

(i)   in an earlier income tax return of the above-referenced taxpayer or a person related to that taxpayer;

(ii)  being considered by a tax services office or a taxation centre in connection with a previously filed tax return of the above-referenced taxpayer or a person related to that taxpayer;

(iii) under objection by the above-referenced taxpayer or a person related to that taxpayer;

(iv)  before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has expired; or

(v)   the subject of a ruling previously issued by the Income Tax Rulings Directorate.

Furthermore, the above-referenced taxpayer has confirmed that the proposed transactions described herein will not result in it or any related person described herein being unable to pay any of its outstanding tax liabilities. Unless otherwise expressly stated, all statutory references herein are to sections or subsections, paragraphs or subparagraphs and clauses or sub-clauses of the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c.1, as amended from time to time and consolidated to the date of this letter, and all references to monetary amounts are in Canadian dollars.

DEFINITIONS:

In this letter, the following terms have the meanings specified below:

“A” means XXXXXXXXXX.

“ACB” means adjusted cost base as that term is defined in section 54.

“Advantage” means the advantage in respect of a gift defined in subsection 248(32).

“Agreed Amount” means the amount that a transferor and a transferee of an Eligible Property have agreed on a joint election under the rules found in section 85.

XXXXXXXXXX

“Amalco XXXXXXXXXX” means the amalgamated corporation formed as a result of the Amalgamation, which is a TCC and a CCPC.

“Amalgamation” means the amalgamation of the Predecessor Corporations to form Amalco XXXXXXXXXX.

“Articles of Dissolution” means the articles of dissolution to be filed with the Registrar pursuant to XXXXXXXXXX.

“B” means XXXXXXXXXX, who is an individual resident in Canada.

“BCA” means the Business Corporations Act XXXXXXXXXX.

XXXXXXXXXX

“Capital Gain” has the meaning assigned by paragraph 39(1)(a).

“Capital Property” has the meaning assigned by section 54.

“C” means XXXXXXXXXX, who is an individual resident in Canada.

“CCPC” means Canadian-controlled private corporation as that term is defined in subsection 125(7).

“CDA” means capital dividend account as that term is defined in subsection 89(1).

“Charitable Organization” has the meaning assigned by subsection 149.1(1).

“XXXXXXXXXX Trust” means XXXXXXXXXX, which is a Canadian resident Testamentary Trust created on A’s death. The primary beneficiaries of the XXXXXXXXXX Trust are D and the issue of A.

XXXXXXXXXX.

XXXXXXXXXX is the trustee of the XXXXXXXXXX Trust.

“Controlling Interest” refers to the ownership of shares in a corporation that confers to a shareholder or a group of shareholders de jure control over that corporation.

“Corporation 1” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 2” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 3” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 4” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 5” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 6” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 7” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 8” means XXXXXXXXXX, which is TCC and a CCPC.

“Corporation 9” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 10” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 11” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 12” means XXXXXXXXXX which is a TCC and a CCPC.

“Corporation 12 XXXXXXXXXX non-voting preference shares” means the XXXXXXXXXX non-voting preference shares issued by Corporation 12, each of which is redeemable for $XXXXXXXXXX.

“Corporation 13” means XXXXXXXXXX, which is a TCC and a CCPC. 

“Corporation 14” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 15” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 16” means XXXXXXXXXX which is a TCC and a CCPC.

“Corporation 17” means XXXXXXXXXX, which is a TCC and a Public Corporation the shares of which are listed on the XXXXXXXXXX. Corporation 17 is XXXXXXXXXX. As of XXXXXXXXXX, the XXXXXXXXXX owned XXXXXXXXXX Class XXXXXXXXXX shares and XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17 representing approximately XXXXXXXXXX% of the voting shares in that corporation and XXXXXXXXXX% of the aggregate FMV of all the issued and outstanding shares in that corporation.

“Corporation 17 Class XXXXXXXXXX Shares” means the Class XXXXXXXXXX Voting Shares of Corporation 17.

“Corporation 17 Class XXXXXXXXXX Shares” means the Class XXXXXXXXXX Non-Voting Shares of Corporation 17.

“Corporation 18” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 18 XXXXXXXXXX” means a TCC and a CCPC, which is the continuation of Corporation 18 as XXXXXXXXXX as described in Paragraph 53.

“Corporation 19” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 20” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 21” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 22” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 23” means XXXXXXXXXX, which is a TCC and a CCPC. 

“Corporation 24” means XXXXXXXXXX, which is a TCC and a CCPC.

“Corporation 25” means XXXXXXXXXX, which is a TCC and a CCPC.

“Cost Amount” has the meaning assigned by subsection 248(1).

“CRA” means the Canada Revenue Agency.

“D” means XXXXXXXXXX, the spouse of A, who is an individual resident in Canada.

“Deduction for Charitable Gifts” means a deduction under paragraph 110.1(1)(a).

“Designated Person” has the meaning assigned by subsection 74.5(5).

“Designated Stock Exchange” has the meaning assigned by subsection 248(1).

“Donated Shares” means Class XXXXXXXXXX shares in Corporation 17 having a FMV of approximately $XXXXXXXXXX that Holdco3 will donate to the Foundation.

“Donation” means Holdco3’s gift of the Class XXXXXXXXXX shares in Corporation 17 to the Foundation described in Paragraph 44.

“Donees” means Public XXXXXXXXXX collectively.

“E” means XXXXXXXXXX, who is an individual resident in Canada.

“Eligible Property” has the meaning assigned by subsection 85(1.1).

“F” means XXXXXXXXXX, who is an individual resident in Canada.

“Family” means D and the issue of A and D.

“Family Corporations” refers to a group of corporations comprised of Corporation 4, Corporation 9, Corporation 14 and Corporation 13.

“FMV” means fair market value, which refers to the amount, expressed in money terms, that is the highest price available in an open and unrestricted market, between informed and prudent parties acting at arm's length.

“Foundation” means XXXXXXXXXX created by A on XXXXXXXXXX as a non-profit organization to maintain a fund the principal and income from which is to be applied, in whole or in part, for charitable purposes to any recipient the donation to whom would qualify as a charitable gift, a gift to Her Majesty under the ITA, or a gift to an institution made pursuant to the Cultural Property Export and Import Act. The Foundation is a Registered Charity.

“G” means XXXXXXXXXX.

“H” means XXXXXXXXXX.

“Holdco 1” means the XXXXXXXXXX formed by Corporation 25 as described in Paragraph 23.

“Holdco 2” means the XXXXXXXXXX formed by Corporation 25 as described in Paragraph 23.

“Holdco 3” means the XXXXXXXXXX formed by Corporation 25 as described in Paragraph 23.

“Holdco 4” means the XXXXXXXXXX formed by Corporation 25 as described in Paragraph 23.

“I” means XXXXXXXXXX.

“ITA” means the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), as amended to the date hereof and, unless otherwise stated, reference herein to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provision of the ITA.

“J” means XXXXXXXXXX.

“K” means XXXXXXXXXX.

“Newco” means the TCC to be incorporated by Trust 2, Corporation 19 and Corporation 25 pursuant to the XXXXXXXXXX as described in Paragraph 49.

“Newco Corporation 15” means the TCC that will be incorporated by Corporation 15 pursuant to the XXXXXXXXXX as described in Paragraph 41.

“Newco Corporation 16” means the TCC that will be incorporated by Corporation 16 pursuant to the XXXXXXXXXX as described in Paragraph 39.

“Newco XXXXXXXXXX Non-Voting Preference Shares” means the XXXXXXXXXX non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX per share that Corporation 19 held in Newco prior to the Amalgamation.

“Net Capital Loss” has the meaning assigned by subsection 111(8).

“Non-Capital Loss” has the meaning assigned by subsection 111(8).

“Paragraph” means a numbered paragraph in this letter.

“Personal Trust” has the meaning assigned by subsection 248(1).

“Predecessor Corporation” means Corporation 3, Corporation 2, Corporation 12, Corporation 1, Corporation 10, Corporation 11, Corporation 7, Corporation 6, Corporation 19, Corporation 21, Corporation 18 XXXXXXXXXX, Corporation 15 and Corporation 16.

“PSA” means the Public Services Act XXXXXXXXXX.

“Private Foundation” has the meaning assigned by subsection 149.1(1).

XXXXXXXXXX.

“Proposed Transactions” means the transactions described in the Proposed Transactions section of this letter.

“Public Charity 1” means XXXXXXXXXX, which is a Public Foundation and a Registered Charity.

XXXXXXXXXX.

XXXXXXXXXX.

“Public Corporation” has the meaning assigned by subsection 89(1).

“Public Foundation” has the meaning assigned by subsection 149.1(1).

“PUC” means Paid-Up Capital as that term is defined in subsection 89(1).

“Registrar” means the registrar of corporations appointed under the PSA.

“Registered Charity” has the meaning assigned by subsection 248(1).

“Small Business Corporation” has the meaning assigned by subsection 248(1).

“Specified Shareholder” has the meaning assigned by subsection 248(1) if the definition of that term were read without reference to paragraphs (a) and (d) of that definition and if the reference therein to “any other corporation that is related to the corporation” were read as a reference to “any other corporation (other than a Small Business Corporation) that is related to the corporation”.

“Spouse Trust” means XXXXXXXXXX, which is a Canadian resident Testamentary Trust created on A’s death for the benefit of D. 

During D’s lifetime, all the net income of the Spouse Trust must be paid to her, and no income or capital of the Spouse Trust may be paid to any person other than D. Following D’s death, the assets of the Spouse Trust, if any, must be transferred to XXXXXXXXXX.

The trustees of the Spouse Trust are D and G.

“Stated Capital” means the amount reported in the Stated Capital Account attributable to a share.

“Stated Capital Account” refers to the account that a corporation is required to maintain for each class of shares that it issues in accordance with XXXXXXXXXX.

“Taxable Capital Gain” has the meaning assigned by paragraph 38(a).

“Taxable Income” means the taxable income of a taxpayer calculated in accordance with the rules found in Division C.

“TCC” means taxable Canadian corporation as that term is defined in subsection 89(1).

“Testamentary Trust” has the meaning assigned by subsection 108(1).

“Transferred Shares” means the Corporation 17 Class XXXXXXXXXX shares having an aggregate FMV of approximately $XXXXXXXXXX that Newco Corporation 15 will transfer to Holdco 3 in consideration for non-share consideration equal to the ACB of the Class XXXXXXXXXX shares in Corporation 17 to be transferred to Holdco 3 and redeemable and retractable preference shares in Holdco 3 as described in Paragraph 47.

“Trust 1” means XXXXXXXXXX, which is a Canadian resident inter vivos Personal Trust settled by A on XXXXXXXXXX for the benefit of: (i) its primary beneficiaries which are the issue of the XXXXXXXXXX, the Foundation or other charities selected by the trustees of Trust 1; and (ii) its secondary beneficiaries, which include XXXXXXXXXX. 

No income or capital of Trust 1 can be allocated to a secondary beneficiary at a time when a primary beneficiary is alive. 

The trustees of Trust 1 are B, D, E, G, H, I, J and K.

“Trust 2” means XXXXXXXXXX which is a Canadian resident inter vivos Personal Trust settled by A on XXXXXXXXXX for the benefit of: (i) its primary beneficiaries which are the issue of the XXXXXXXXXX, the Foundation or other charities selected by the trustees of the Trust 2, and (ii) its secondary beneficiaries, which include XXXXXXXXXX. 

No income or capital of Trust 2 can be allocated to a secondary beneficiary at a time when a primary beneficiary of the Trust 2 is alive. 

The trustees of Trust 2 are B, D, E, G, H, I and J.

“Trust 3” means XXXXXXXXXX, which is a Canadian resident inter vivos Personal Trust settled by A on XXXXXXXXXX for the benefit of: (i) its primary beneficiaries which are D, the XXXXXXXXXX, the Foundation or other charity selected by the trustees of Trust 3, and (ii) its secondary beneficiaries of Trust 3, which include XXXXXXXXXX. 

No income or capital of Trust 3 can be allocated to a secondary beneficiary at a time when a primary beneficiary of Trust 3 is alive. 

The trustees of Trust 3 are D, G, H, I, J and K.

“Trust 4” means XXXXXXXXXX, which is a Canadian resident inter vivos Personal Trust settled by XXXXXXXXXX on XXXXXXXXXX for the benefit of: (i) its primary beneficiaries which are DXXXXXXXXXX, the spouses of XXXXXXXXXX, and any charity selected by the trustees of Trust 4 and (ii) its secondary beneficiaries which include XXXXXXXXXX.

No income or capital of Trust 4 can be allocated to a secondary beneficiary at a time when a primary beneficiary of Trust 4 is alive. 

The trustees of Trust 4 are D, G, H and I.

“Trusts” refers to Trust 1, Trust 2, Trust 3 and Trust 4.

“US” means the United States of America.

“Wind-Up” means the wind-up of Amalco XXXXXXXXXX into Newco as described in Paragraph 66.

FACTS:

D and the Spouse Trust

1.    D will be the only beneficiary of the Spouse Trust during her lifetime.

2.    D owns XXXXXXXXXX non-voting preference shares in Corporation 12, each of which is redeemable and retractable at a price of $XXXXXXXXXX and provides a cumulative dividend entitlement at an annual rate of XXXXXXXXXX% of its redemption value.  D holds her Corporation 12 shares on capital account.

3.    The Spouse Trust owns XXXXXXXXXX non-voting preference shares in Corporation 12, each of which is redeemable and retractable at a price of $XXXXXXXXXX. The Spouse Trust holds the Corporation 12 shares on capital account.

B, C, E and F

4.    B, C, E and F each own XXXXXXXXXX common shares in Corporation 1 on capital account. The aggregate of which represents XXXXXXXXXX% of the voting shares in Corporation 1. Corporation 25 owns the remaining XXXXXXXXXX% of the voting shares in Corporation 1.

5.    B owns all the shares in Corporation 9, which owns XXXXXXXXXX non-voting preference shares in Corporation 12 each of which is redeemable and retractable at a price of $XXXXXXXXXX. Corporation 9 holds its Corporation 12 shares on capital account.

6.    C owns all the shares in Corporation 4, which owns XXXXXXXXXX non-voting preference shares in Corporation 12 each of which is redeemable and retractable at a price of $XXXXXXXXXX. Corporation 4 holds its Corporation 12 shares on capital account.

7.    E owns all the shares in Corporation 14, which owns XXXXXXXXXX non-voting preference shares in Corporation 12 each of which is redeemable and retractable at a price of $XXXXXXXXXX. Corporation 14 holds its Corporation 12 shares on capital account.

8.    F owns all the shares in Corporation 13, which owns XXXXXXXXXX non-voting preference shares in Corporation 12 each of which is redeemable and retractable at a price of $XXXXXXXXXX. Corporation 13 holds its Corporation 12 shares on capital account.

The Trusts

9.    Trust 1 owns XXXXXXXXXX common shares in Corporation 19 representing XXXXXXXXXX% of the voting shares in that corporation.  Corporation 25 owns the remaining XXXXXXXXXX% of the voting shares in Corporation 19. Trust 1 holds its Corporation 19 shares on capital account.

10.   Trust 2 owns XXXXXXXXXX common shares in Corporation 18 representing XXXXXXXXXX% of the voting shares in that corporation. Corporation 25 owns the remaining XXXXXXXXXX% of the voting shares in Corporation 18. Trust 2 holds its Corporation 18 shares on capital account.

11.   Trust 3 owns: (i) XXXXXXXXXX common shares in Corporation 6 representing all the issued and outstanding common shares in that corporation, and XXXXXXXXXX Class A non-voting preferred shares in Corporation 6, each of which is redeemable and retractable at a price of $XXXXXXXXXX; (ii) XXXXXXXXXX Class C non-voting preferred share in Corporation 10, which is redeemable and retractable for $XXXXXXXXXX; and (iii) XXXXXXXXXX Class B shares in Corporation 17. Trust 3 holds its Corporation 6, Corporation 10 and Corporation 17 shares on capital account.

12.   Trust 4 owns: (i) XXXXXXXXXX common shares in Corporation 3, which represent XXXXXXXXXX% of the issued and outstanding voting shares in that corporation, and XXXXXXXXXX Class A (non-voting) preferred shares in Corporation 3 each of which is redeemable and retractable at a price of $XXXXXXXXXX, and (ii) XXXXXXXXXX Class A (non-voting) preferred shares in Corporation 2 each of which is redeemable and retractable at a price of $XXXXXXXXXX. Trust 4 holds its Corporation 3 and Corporation 2 shares on capital account.

13.   The XXXXXXXXXX Trust owns all of the shares of Corporation 25.

The Corporate group

14.   Corporation 25 owns shares in the following corporations:

(a)   Corporation 1: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(b)   Corporation 3: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% its voting shares, each of which is held on capital account;

(c)   Corporation 12: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(d)   Corporation 2: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(e)   Corporation 10: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(f)   Corporation 11: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(g)   Corporation 7: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(h)   Corporation 19: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account;

(i)   Corporation 23: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account; and

(j)   Corporation 18: XXXXXXXXXX Class B voting non-participating preference shares representing XXXXXXXXXX% of its voting shares, each of which is held on capital account.

All of the Class B voting preference shares listed in this paragraph are redeemable and retractable at a price of $XXXXXXXXXX per share and carry the right to cumulative dividends at an annual rate of XXXXXXXXXX% of their redemption value.

15.   Corporation 1 owns XXXXXXXXXX Class A common shares and XXXXXXXXXX Class B common shares in Corporation 12, which represent XXXXXXXXXX% of the voting shares in that corporation.

16.   Corporation 12 owns XXXXXXXXXX Class A non-voting preference in Corporation 10, each of which is redeemable and retractable at a price of $XXXXXXXXXX. Corporation 12 also owns XXXXXXXXXX Class D non-voting preference shares in Corporation 10 each of which is redeemable and retractable at a price of $XXXXXXXXXX.

17.   Corporation 2 owns XXXXXXXXXX common shares in Corporation 10, which represent XXXXXXXXXX% of its voting shares.

18.   Corporation 3 is a TCC and a CCPC. Corporation 3 owns (among other assets) XXXXXXXXXX common shares (representing XXXXXXXXXX% of the voting shares) of Corporation 2.

19.   Corporation 10 owns the following shares: (i) XXXXXXXXXX common shares in Corporation 11 representing XXXXXXXXXX% of its voting shares, (ii) XXXXXXXXXX Class A non-voting preference shares in Corporation 11 each of which is redeemable and retractable at a price of $XXXXXXXXXX, and (iii) XXXXXXXXXX Class A XXXXXXXXXX non-voting preference shares in Corporation 7 each of which is redeemable and retractable at a price of $XXXXXXXXXX.

20.   Corporation 11 owns XXXXXXXXXX non-voting preference shares in Corporation 19 each of which is redeemable and retractable at a price of $XXXXXXXXXX.

21.   Corporation 6 owns XXXXXXXXXX common shares in Corporation 7 representing XXXXXXXXXX% of its voting shares.

22.   Corporation 7 owns shares in the following corporations:

(a)   Corporation 21: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares, XXXXXXXXXX Class B non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX Class C non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX and XXXXXXXXXX Class D non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX;

(b)   Corporation 23: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares, and XXXXXXXXXX Class C non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX;

(c)   Corporation 19: XXXXXXXXXX non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX; and

(d)   Corporation 6: XXXXXXXXXX Class A non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX.

22.1. Corporation 21 owns XXXXXXXXXX non-voting preference shares in Corporation 19 each of which is redeemable and retractable at a price of $XXXXXXXXXX.

22.2. Corporation 23 owns shares in the following corporations:

(a)   Corporation 7: XXXXXXXXXX Class A XXXXXXXXXX non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX, and XXXXXXXXXX Class A XXXXXXXXXX non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX;

(b)   Corporation 24: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares; and

(c)   Corporation 12: XXXXXXXXXX non-voting preference shares each of which is redeemable at a price of $XXXXXXXXXX. 

Corporation 23 holds its Corporation 7, Corporation 24 and Corporation 12 shares on capital account.

22.3. Corporation 22 owns XXXXXXXXXX non-voting preference shares in Corporation 19 each of which is redeemable and retractable at a price of $XXXXXXXXXX.  Corporation 22 holds its Corporation 19 shares on capital account.

22.4. Corporation 19 owns XXXXXXXXXX non-voting preference shares in Corporation 18 each of which is redeemable and retractable at a price of $XXXXXXXXXX. Corporation 19 holds its Corporation 18 shares on capital account.

22.5. Corporation 18 owns shares in the following corporations:

(a)   Corporation 17: XXXXXXXXXX Class XXXXXXXXXX shares representing approximately XXXXXXXXXX% of its voting shares and XXXXXXXXXX Class XXXXXXXXXX shares;

(b)   Corporation 23: XXXXXXXXXX Class D non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX; and

(c)   Corporation 15: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares.
1
Corporation 18 holds its Corporation 17, Corporation 23 and Corporation 15 shares on capital account.

22.6. [Reserved]

22.7. Corporation 15 owns shares in the following corporations:

(a)   Corporation 5: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares;

(b)   Corporation 20: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares;

(c)   Corporation 8: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares; and XXXXXXXXXX Class B voting preference representing XXXXXXXXXX% of its remaining voting shares each of which is redeemable and retractable at a price of $XXXXXXXXXX;

(d)   Corporation 16: XXXXXXXXXX common shares representing XXXXXXXXXX% of its voting shares;

(e)   Corporation 21: XXXXXXXXXX Class C non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX;

(f)   Corporation 23: XXXXXXXXXX Class D non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX; and

(g)   Corporation 17: XXXXXXXXXX Class XXXXXXXXXX shares.  

Corporation 15 holds its Corporation 5, Corporation 20, Corporation 8, Corporation 16, Corporation 21, Corporation 23 and Corporation 17 shares on capital account.

22.8. Corporation 16 owns shares in the following corporations:

(a)   Corporation 7: XXXXXXXXXX Class D non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX, and XXXXXXXXXX Class E non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX; 

(b)   Corporation 21: XXXXXXXXXX Class C non-voting preference shares each of which is redeemable and retractable at a price of $XXXXXXXXXX per share; and

(c)   Corporation 17: XXXXXXXXXX Class XXXXXXXXXX shares representing approximately XXXXXXXXXX% of the voting shares in that corporation, and XXXXXXXXXX Class XXXXXXXXXX shares.

Corporation 16 holds its Corporation 7, Corporation 21 and Corporation 17 shares on capital account.

22.9. Corporation 20 owns XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17.

22.10.      The Foundation owns XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17.  It does not own any Class XXXXXXXXXX shares in Corporation 17 or shares of any of the corporate members of the Private Holding Group.

22.11.      Corporation 8 owns XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17.

PROPOSED TRANSACTIONS:

Day 1

The incorporation of the XXXXXXXXXX

23.   Corporation 25 will form Holdco 1, Holdco 2, Holdco 3 and Holdco 4 each of which will qualify as a TCC.

Corporation 25’s acquisition of Class B Voting non-participating shares in the XXXXXXXXXX

24.   [Reserved]

25.   Corporation 25 will transfer XXXXXXXXXX Class B voting non-participating preference shares in Corporation 19 that it holds on account of capital to Holdco 1 in exchange for XXXXXXXXXX Class B voting non-participating preference shares in Holdco 1 the terms and conditions of which will be identical to the terms and conditions of the Corporation 19 shares that will be transferred to Holdco1.

Corporation 25 and Holdco 1 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6), to have the provisions in subsection 85(1) apply to the transfer of the Corporation 19 shares to Holdco 1.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 19 shares at the time of the transfer.  Specifically, the Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the Class B voting non-participating preference shares in Holdco 1 will not exceed the cost to Holdco 1 of the Corporation 19 shares less the amount of liabilities, if any, to be assumed by Holdco 1.  For greater certainty, the increase to the Stated Capital Account of the Class B voting non-participating preference shares in Holdco 1 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

25.1. Corporation 25 will transfer XXXXXXXXXX Class B voting non-participating preference shares in each of Corporation 3, Corporation 2, Corporation 10 and Corporation 11 that it holds on account of capital to Holdco 2 in exchange for an aggregate XXXXXXXXXX Class B voting non-participating preference shares in Holdco 2, the terms and conditions of which will be identical to the terms and conditions of the shares in Corporation 3, Corporation 2, Corporation 10 and Corporation 11 that will be transferred to Holdco 2. 

Corporation 25 and Holdco 2 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6), to have the provisions in subsection 85(1) apply to the transfer of the shares to Holdco 2.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the shares in Corporation 3, Corporation 2, Corporation 10 and Corporation 11 at the time of the transfer.  Specifically, the Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the Class B voting non-participating preference shares in Holdco 2 will not exceed the aggregate cost to Holdco 2 of the shares in Corporation 3, Corporation 2, Corporation 10 and Corporation 11 less the amount of liabilities, if any, to be assumed by Holdco 2.  For greater certainty, the increase to the Stated Capital Account of the Class B voting non-participating preference shares in Holdco 2 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

25.2. Corporation 25 will transfer XXXXXXXXXX Class B voting non-participating preference shares in Corporation 7 that it holds on account of capital to Holdco 3 in exchange for XXXXXXXXXX Class B voting non-participating preference shares in Holdco 3 the terms and conditions of which will be identical to the terms and conditions of the shares in Corporation 7 that will be transferred to Holdco 3.

Corporation 25 and Holdco 3 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6), to have the provisions in subsection 85(1) apply to the transfer of the shares to Holdco 3.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the shares in Corporation 7 at the time of the transfer.  Specifically, the Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the Class B voting non-participating preference shares in Holdco 3 will not exceed the aggregate cost to Holdco 3 of the shares in Corporation 7 less the amount of liabilities, if any, to be assumed by Holdco 3.  For greater certainty, the increase to the Stated Capital Account of the Class B voting non-participating preference shares in Holdco 3 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

25.3. Corporation 25 will transfer XXXXXXXXXX Class B voting non-participating preference shares of Corporation 1, and XXXXXXXXXX Class B voting non-participating preference shares in Corporation 12 that it holds on account of capital to Holdco 4 in exchange for XXXXXXXXXX Class B voting non-participating preference shares in Holdco 4 the terms and conditions of which will be identical to the terms and conditions of the shares in Corporation 12 and Corporation 1 that will be transferred to Holdco 4.

Corporation 25 and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6), to have the provisions in subsection 85(1) apply to the transfer of the shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the shares in Corporation 1 and Corporation 12 at the time of the transfer.  Specifically, the Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the Class B voting non-participating preference shares in Holdco 4 will not exceed the aggregate cost to Holdco 4 of the shares in Corporation 1 and Corporation 12 less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the Class B voting non-participating preference shares in Holdco 4 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Trust 1’s transfer of Corporation 19 shares to Holdco 1

26.   Trust 1 will transfer XXXXXXXXXX common shares in Corporation 19 to Holdco 1 in exchange for XXXXXXXXXX common shares of Holdco 1 having an aggregate FMV equal to the FMV of the Corporation 19 shares that will be transferred to Holdco 1.

Trust 1 and Holdco 1 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6), to have the provisions in subsection 85(1) apply to the transfer of the Corporation 19 shares to Holdco 1.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 19 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 1 will not exceed the cost to Holdco 1 of the Corporation 19 shares less the amount of liabilities, if any, to be assumed by Holdco 1.  For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 1 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares that Trust 1 holds in Corporation 19 in accordance with paragraph 84.1(1)(a).

Holdco 1 will hold each of the XXXXXXXXXX common shares in Corporation 19 that it will receive from Trust 1 on capital account.

Trust 4’s transfer of shares in Corporation 2 and Corporation 3 to Holdco 2

27.   Trust 4 will transfer: (i) XXXXXXXXXX Class A non-voting preference shares in Corporation 2, and (ii) XXXXXXXXXX common shares and XXXXXXXXXX Class A non-voting preference shares in Corporation 3 to Holdco 2 in exchange for XXXXXXXXXX common shares in Holdco 2 having an aggregate FMV equal to the aggregate FMV of the Corporation 3 and Corporation 2 shares that will be transferred to Holdco 2.

Trust 4 and Holdco 2 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6), to have the provisions in subsection 85(1) apply to the transfer of the Corporation 2 and Corporation 3 shares to Holdco 2.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the Corporation 2 and Corporation 3 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 2 will not exceed the aggregate cost to Holdco 2 of the shares in Corporation 2 and Corporation 3 less the amount of liabilities, if any, to be assumed by Holdco 2. For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 2 will not exceed the greater of the PUC and the ACB of the: (i) XXXXXXXXXX Class A non-voting preference shares in Corporation 2, and (ii) XXXXXXXXXX common shares and XXXXXXXXXX Class A non-voting preference shares in Corporation 3 that Trust 4 holds in Corporation 2 and Corporation 3 in accordance with paragraph 84.1(1)(a).

Holdco 2 will hold each of the: (i) XXXXXXXXXX common shares, XXXXXXXXXX Class B voting preference shares and XXXXXXXXXX Class A non-voting preference share in Corporation 3, and (ii) XXXXXXXXXX Class B voting preference shares and XXXXXXXXXX Class A non-voting preference shares in Corporation 2 that it will receive from Trust 4 on capital account.

Trust 3’s transfer of Corporation 6 shares to Holdco 3

28.   Trust 3 will transfer the XXXXXXXXXX common shares and the XXXXXXXXXX Class A non-voting preference shares that it holds in Corporation 6 to Holdco 3 in exchange for XXXXXXXXXX common shares in Holdco 3 having an aggregate FMV equal to the aggregate FMV of the Corporation 6 shares that will be transferred to Holdco 3.

Trust 3 and Holdco 3 will jointly elect in prescribed form and within the time limits prescribed by subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 6 shares to Holdco 3.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 6 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 3 will not exceed the aggregate cost to Holdco 3 of the Corporation 6 shares less the amount of liabilities, if any, to be assumed by Holdco 3.  For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 3 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares and the XXXXXXXXXX Class A non-voting preference shares that Trust 3 holds in Corporation 6 in accordance with paragraph 84.1(1)(a).

Holdco 3 will hold each of the XXXXXXXXXX common shares and the XXXXXXXXXX Class A non-voting preference shares in Corporation 6 that it will receive from the Trust 3 on capital account.

28.1. Corporation 10 will redeem the XXXXXXXXXX Class C share held by Trust 3 for its redemption amount of $XXXXXXXXXX.

B’s, C’s, E’s and F’s transfer of Corporation 1 shares to Holdco 4

29.   C will transfer XXXXXXXXXX common shares in Corporation 1 to Holdco 4 in exchange for XXXXXXXXXX common shares in Holdco 4 having an aggregate FMV equal to the FMV of the Corporation 1 shares that will be transferred to Holdco 4. 

C and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 1 shares to Holdco 4. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 1 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 1 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 4 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares that C holds in Corporation 1 in accordance with paragraph 84.1(1)(a).

Holdco 4 will hold each of the XXXXXXXXXX common shares in Corporation 1 that it will receive from C on capital account.

30.   B will transfer XXXXXXXXXX common shares in Corporation 1 to Holdco 4 in exchange for XXXXXXXXXX common shares in Holdco 4 having an aggregate FMV equal to the FMV of the Corporation 1 shares that will be transferred to Holdco 4.

B and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 1 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 1 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 1 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 4 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares that B holds in Corporation 1 in accordance with paragraph 84.1(1)(a).

Holdco 4 will hold each of the XXXXXXXXXX common shares in Corporation 1 that it will receive from B on capital account.

31.   E will transfer XXXXXXXXXX common shares in Corporation 1 to Holdco 4 in exchange for XXXXXXXXXX common shares of Holdco 4 having an aggregate FMV equal to the FMV of the Corporation 1 shares that will be transferred to Holdco 4.

E and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 1 shares to Holdco 4. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 1 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 1 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 4 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares that E holds in Corporation 1 in accordance with paragraph 84.1(1)(a).

Holdco 4 will hold each of the XXXXXXXXXX common shares in Corporation 1 that it will receive from E on capital account.

32.   F will transfer XXXXXXXXXX common shares in Corporation 1 to Holdco 4 in exchange for XXXXXXXXXX common shares in Holdco 4 having an aggregate FMV equal to the FMV of the Corporation 1 shares that will be transferred to Holdco 4.

F and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 1 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 1 shares at the time of the transfer.  Specifically, the Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 1 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the common shares in Holdco 4 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares that F holds in Corporation 1 in accordance with paragraph 84.1(1)(a).

Holdco 4 will hold each of the XXXXXXXXXX common shares in Corporation 1 that it will receive from F on capital account.

Family Corporations’, D’s and Spouse Trust’s transfer of Corporation 12 shares to Holdco 4

33.   Corporation 4 will transfer XXXXXXXXXX non-voting preference shares in Corporation 12 to Holdco 4 in exchange for XXXXXXXXXX preference shares in Holdco 4, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 shares that will be transferred to Holdco 4.  The FMV of the Holdco 4 preference shares to be issued to Corporation 4 will have an aggregate FMV equal to the aggregate FMV of the Corporation 12 shares that will be transferred to Holdco 4.

Corporation 4 and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 12 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 12 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital of the preference shares in Holdco 4 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 4 will hold each of the XXXXXXXXXX non-voting preference shares in Corporation 12 that it will receive from Corporation 4 on capital account.

34.   Corporation 13 will transfer XXXXXXXXXX non-voting preference shares in Corporation 12 to Holdco 4 in exchange for XXXXXXXXXX preference shares in Holdco 4, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 shares that will be transferred to Holdco 4.  The FMV of the preference shares in Holdco 4 to be issued to Corporation 13 will have an aggregate FMV equal to the aggregate FMV of the Corporation 12 shares that will be transferred to Holdco 4.

Corporation 13 and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 12 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 12 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital of the preference shares in Holdco 4 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 4 will hold each of the XXXXXXXXXX non-voting preference shares in Corporation 12 that it will receive from Corporation 13 on capital account.

35.   Corporation 14 will transfer XXXXXXXXXX non-voting preference shares in Corporation 12 to Holdco 4 in exchange for XXXXXXXXXX preference shares in Holdco 4, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 shares that will be transferred to Holdco 4. The FMV of the preference shares in Holdco 4 to be issued to Corporation 14 will have an aggregate FMV equal to the aggregate FMV of the Corporation 12 shares that will be transferred to Holdco 4.

Corporation 14 and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 12 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 12 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital of the preference shares in Holdco 4 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 4 will hold each of the XXXXXXXXXX non-voting preference shares in Corporation 12 that it will receive from Corporation 14 on capital account.

36.   Corporation 9 will transfer XXXXXXXXXX non-voting preference shares in Corporation 12 to Holdco 4 in exchange for XXXXXXXXXX preference shares in Holdco 4, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 shares that will be transferred to Holdco 4. The FMV of the preference shares in Holdco 4 to be issued to Corporation 9 will have an aggregate FMV equal to the aggregate FMV of the Corporation 12 shares that will be transferred to Holdco 4.

Corporation 9 and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 12 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 12 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital of the preference shares in Holdco 4 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 4 will hold each of the XXXXXXXXXX non-voting preference shares in Corporation 12 that it will receive from Corporation 9 on capital account.

37.   D will transfer XXXXXXXXXX non-voting preference shares in Corporation 12 to Holdco 4, each of which entitles its holder to a cumulative dividend at an annual rate of XXXXXXXXXX% of its redemption value in exchange for preference shares in Holdco 4, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 shares that will be transferred to Holdco 4. The aggregate FMV of the preference shares in Holdco 4 to be issued to D will be equal to the aggregate FMV of the Corporation 12 shares that will be transferred to Holdco 4.

D and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 12 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 12 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the preference shares in Holdco 4 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX non-voting preference shares that D holds in Corporation 12 in accordance with paragraph 84.1(1)(a).

Holdco 4 will hold each of the XXXXXXXXXX non-voting preference shares in Corporation 12 that it will receive from D on capital account.

38.   The Spouse Trust will transfer XXXXXXXXXX non-voting preference shares in Corporation 12 to Holdco 4 in exchange for preference shares in Holdco 4, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 shares that will be transferred to Holdco 4. The FMV of the preference shares in Holdco 4 to be issued to the Spouse Trust will have an aggregate FMV equal to the aggregate FMV of the Corporation 12 shares that will be transferred to Holdco 4.

The Spouse Trust and Holdco 4 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 12 shares to Holdco 4.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 4 will not exceed the cost to Holdco 4 of the Corporation 12 shares less the amount of liabilities, if any, to be assumed by Holdco 4.  For greater certainty, the increase to the Stated Capital Account of the preference shares in Holdco 4 will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX non-voting preference shares that Spouse Trust holds in Corporation 12 in accordance with paragraph 84.1(1)(a).

Holdco 4 will hold each of the XXXXXXXXXX non-voting preference shares in Corporation 12 that it will receive from the Spouse Trust on capital account.

Corporation 16’s and Corporation 15’s transfer of Corporation 17 shares to New Corporation 16 and New Corporation 15

39.   Corporation 16 will incorporate Newco Corporation 16 under the XXXXXXXXXX, which will be Corporation 16’s wholly-owned subsidiary.

40.   Corporation 16 will transfer XXXXXXXXXX Class XXXXXXXXXX shares and XXXXXXXXXX Class XXXXXXXXXX in Corporation 17 to Newco Corporation 16 in exchange for common shares in Newco Corporation 16 having an aggregate FMV equal to the aggregate FMV of the Corporation 17 shares that will be transferred to Newco Corporation 16.

Corporation 16 and Newco Corporation 16 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 17 shares to Newco Corporation 16. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 17 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Newco Corporation 16 will not exceed the cost to Newco Corporation 16 of the Corporation 17 shares less the amount of liabilities, if any, to be assumed by Newco Corporation 16. For greater certainty, the increase to the Stated Capital of the common shares in Newco Corporation 16 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Newco Corporation 16 will hold each of the XXXXXXXXXX Class XXXXXXXXXX shares and XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17 that it will receive from Corporation 16 on capital account.

41.   Corporation 15 will incorporate Newco Corporation 15 under the XXXXXXXXXX, which will be Corporation 15’s wholly-owned subsidiary.

42.   Corporation 15 will transfer all of its assets (other than the shares of Corporation 20, the shares of Corporation 16, the shares of Corporation 8, the shares of Corporation 5, the shares of Corporation 23, the shares of Corporation 21 and any advances receivable from any corporation that will participate in the Amalgamation) including XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17 to Newco Corporation 15 in exchange for common shares in Newco Corporation 15 and non-share consideration having an aggregate FMV equal to the aggregate FMV of the assets that will be transferred to Newco Corporation 15.

Corporation 15 and Newco Corporation 15 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 17 shares to Newco Corporation 15.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 17 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Newco Corporation 15 will not exceed the cost to Newco Corporation 15 of the Corporation 17 shares less the amount of liabilities, if any, to be assumed by Newco Corporation 15. For greater certainty, the increase to the Stated Capital of the common shares in Newco Corporation 15 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Newco Corporation 15 will hold each of the XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17 that it will receive from Corporation 15 on capital account.

Corporation 18’s transfer of Corporation 17 shares to Holdco 3 and the Donation 

43.   Corporation 18 will transfer the Donated Shares to Holdco 3 in exchange for redeemable and retractable preference shares in Holdco 3 having an aggregate FMV equal to the aggregate FMV of the Corporation 17 shares that will be transferred to Holdco 3.

Corporation 18 and Holdco 3 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 17 shares to Holdco 3. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 17 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 3 will not exceed the cost to Holdco 3 of the Corporation 17 shares less the amount of liabilities, if any, to be assumed by Holdco 3. For greater certainty, the increase to the Stated Capital of the preference shares in Holdco 3 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

44.   Immediately thereafter, Holdco 3 will transfer the Donated Shares to the Foundation pursuant to a deed of gift.

45.   Immediately after the Donation, the Foundation will dispose of the Donated Shares to Corporation 20 for proceeds of disposition equal to their FMV pursuant to a purchase and sale agreement. Corporation 20 will satisfy the purchase price in cash.

46.   [Reserved]

Newco Corporation 15’s transfer of the Transferred Shares to Holdco 3

47.   Newco Corporation 15 will transfer the Transferred Shares to Holdco 3 in exchange for non-share consideration equal to the ACB of the Transferred Shares and redeemable and retractable preference shares in Holdco 3.

Newco Corporation 15 and Holdco 3 will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 17 shares to Holdco 3.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 17 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Holdco 3 will not exceed the cost to Holdco 3 of the Corporation 17 shares less the FMV of the non-share consideration to be issued by Holdco 3 and received by Newco Corporation 15.  For greater certainty, the increase to the Stated Capital of the preference shares in Holdco 3 will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 3’s transfer of the Transferred Shares to Corporation 20

48.   Immediately after the transaction described in Paragraph 47, Holdco 3 will transfer the Transferred Shares to Corporation 20 in consideration for non-share consideration equal to the aggregate FMV of the Transferred Shares. Holdco 3 will report a Taxable Capital Gain of approximately $XXXXXXXXXX in respect of this disposition.  Holdco 3 will claim a Deduction for Charitable Gifts in respect of the Donation in computing its Taxable Income.

Day 2

Newco’s incorporation

49.   Corporation 25, Trust 2 and Corporation 19 will incorporate Newco under the XXXXXXXXXX.

Corporation 25’s, Trust 2’s and Corporation 19’s transfer of Corporation 18 shares to Newco

50.   Corporation 25 will transfer XXXXXXXXXX Class B voting preferred shares in Corporation 18 to Newco in exchange for XXXXXXXXXX Class B voting non-participating preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of the Class B voting preference shares in Corporation 18 that will be transferred to Newco. The aggregate FMV of the Class B preference shares in Newco will be equal to the aggregate FMV of the Corporation 18 shares that will be transferred to Newco.

Corporation 25 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 18 shares to Newco.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 18 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the cost to Newco of the Corporation 18 shares less the amount of liabilities, if any, to be assumed by Newco.  For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

51.   Trust 2 will transfer XXXXXXXXXX common shares in Corporation 18 to Newco in exchange for XXXXXXXXXX common shares in Newco having an aggregate FMV equal to the aggregate FMV of the Corporation 18 shares that will be transferred to Newco.

Trust 2 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 18 shares to Newco. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 18 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the common shares in Newco will not exceed the cost to Newco of the Corporation 18 shares less the amount of liabilities, if any, to be assumed by Newco. For greater certainty, the increase to the Stated Capital of the common shares in Newco will not exceed the greater of the PUC and the ACB of the XXXXXXXXXX common shares that Trust 2 holds in Corporation 18 in accordance with paragraph 84.1(1)(a).

52.   Corporation 19 will transfer XXXXXXXXXX non-voting preference shares in Corporation 18 to Newco in exchange for XXXXXXXXXX non-voting preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of the Corporation 18 shares that will be transferred to Newco. The aggregate FMV of the preference shares in Newco to be issued to Corporation 19 will be equal to the aggregate FMV of the Corporation 18 shares that will be transferred to Newco.

Corporation 19 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 18 shares to Newco. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 18 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the XXXXXXXXXX non-voting preference shares in Newco will not exceed the cost to Newco of the Corporation 18 shares less the amount of liabilities, if any, to be assumed by Newco. For greater certainty, the increase to the Stated Capital of the XXXXXXXXXX non-voting preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Day 4

Continuation of Corporation 18 as Corporation 18 XXXXXXXXXX

53.   Corporation 18 will be continued as XXXXXXXXXX.

Day 5

Holdco 1’s transfer of Corporation 19 shares to Newco

54.   Holdco 1 will transfer XXXXXXXXXX common shares and XXXXXXXXXX Class B voting non-participating preference shares in Corporation 19 to Newco in exchange for redeemable and retractable preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX non-voting preference shares in Corporation 18.  The aggregate FMV of the preference shares in Newco to be issued to Holdco 1 will be equal to the FMV of the Corporation 19 shares that will be transferred by Holdco 1 to Newco.  The redemption amount of the Newco preference shares issued to Holdco 1 will be equal to the net asset value of Corporation 19 immediately before the transfer described in this paragraph, minus the priority claims of all the preference shares of Corporation 19 immediately before the transfer (other than the preference shares of Corporation 19 that are held by Holdco 1).

Holdco 1 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 19 shares to Newco. The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 19 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the cost to Newco of the Corporation 19 shares less the amount of liabilities, if any, to be assumed by Newco.  For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 2’s transfer of shares in Corporation 3, Corporation 2 Corporation 10 and Corporation 11 to Newco

55.   Holdco 2 will transfer: (i) XXXXXXXXXX common shares, XXXXXXXXXX Class B voting non-participating preference shares, and XXXXXXXXXX Class A non-voting preference shares in Corporation 3, (ii) XXXXXXXXXX class B voting non-participating preference shares and XXXXXXXXXX Class A non-voting preference shares in Corporation 2, (iii) XXXXXXXXXX Class B voting non-participating preference shares in Corporation 10, and (iv) XXXXXXXXXX Class B voting non-participating preference shares in Corporation 11 to Newco in exchange for redeemable and retractable preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX preference shares in Corporation 19.  The aggregate FMV of the preference shares in Newco to be issued to Holdco 2 will be equal to the FMV of the Corporation 3, Corporation 2, Corporation 10 and Corporation 11 shares that will be transferred by Holdco 2 to Newco.  The redemption amount of the Newco preference shares issued to Holdco 2 will be equal to the consolidated net asset value of Corporation 3, Corporation 2, Corporation 10 and Corporation 11 immediately before the transfer described in this paragraph, minus the priority claims of all the preference shares of Corporation 3, Corporation 2, Corporation 10 and Corporation 11 immediately before the transfer (other than the preference shares of Corporation 3, Corporation 2, Corporation 10 and Corporation 11 that are held by (i) Holdco 2, or (ii) one of Corporation 3, Corporation 2, Corporation 10 or Corporation 11).

Holdco 2 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 3, Corporation 2, Corporation 10 and Corporation 11 shares to Newco.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the Corporation 3 and Corporation 2 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the aggregate cost to Newco of the Corporation 3, Corporation 2, Corporation 10 and Corporation 11 shares less the amount of liabilities, if any, to be assumed by Newco.  For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 3’s transfer of the shares in Corporation 6 and Corporation 7 to Newco

56.   Holdco 3 will transfer: (i) XXXXXXXXXX common shares and XXXXXXXXXX Class A non-voting Holdco preference shares in Corporation 6, and (ii) XXXXXXXXXX Class B voting non-participating preference shares in Corporation 7 to Newco in exchange for redeemable and retractable preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX non-voting preference shares in Corporation 19.  The aggregate FMV of the preference shares in Newco to be issued to Holdco 3 will be equal to the FMV of the Corporation 6 and Corporation 7 shares that will be transferred to Newco.  The redemption amount of the Newco preference shares issued to Holdco 3 will be equal to the consolidated net asset value of Corporation 6 and Corporation 7 immediately before the transfer described in this paragraph, minus the priority claims of all the preference shares of Corporation 6 and Corporation 7 immediately before the transfer (other than the preference shares of Corporation 6 and Corporation 7 that are held by (i) Holdco 3, or (ii) one of Corporation 6 or Corporation 7).

Holdco 3 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 6 and Corporation 7 shares to Newco.  The Agreed Amount in respect of the transfer will not be greater than the FMV of the Corporation 6 and Corporation 7 shares at the time of the transfer. The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the aggregate cost to Newco of the Corporation 6 shares and Corporation 7 shares less the amount of liabilities, if any, to be assumed by Newco.  For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Holdco 4’s transfer of shares in Corporation 12 and Corporation 1 to Newco

57.   Holdco 4 will transfer: (i) XXXXXXXXXX common shares and XXXXXXXXXX Class B voting non-participating preference shares in Corporation 1, and (ii) XXXXXXXXXX Class B voting non-participating preference shares, XXXXXXXXXX non-voting preferences shares, XXXXXXXXXX non-voting preference shares and XXXXXXXXXX non-voting preference shares in Corporation 12 to Newco in exchange for redeemable and retractable preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of the Class A and D non-voting preference shares in Corporation 10 (the Newco preference shares to be issued as described in this paragraph will be proportionate in value to the Class A and D non-voting preference shares in Corporation 10 immediately before the transfer). The aggregate FMV of the preference shares in Newco to be issued to Holdco 4 will be equal to the FMV of the Corporation 1 and the Corporation 12 shares that will be transferred to Newco.  The redemption amount of the Newco preference shares issued to Holdco 4 will be equal to the consolidated net asset value of Corporation 1 and Corporation 12 immediately before the transfer described in this paragraph, minus the priority claims of all the preference shares of Corporation 1 and Corporation 12 immediately before the transfer (other than the preference shares of Corporation 1 and Corporation 12 that are held by (i) Holdco 4, or (ii) one of Corporation 1 or Corporation 12).

Holdco 4 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Corporation 1 and Corporation 12 shares to Newco. The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the Corporation 1 and Corporation 12 shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the aggregate cost to Newco of the Corporation 1 and Corporation 12 shares less the amount of liabilities, if any, to be assumed by Newco.  For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Day 6

Amalgamation

58.   Any of the Predecessor Corporations that was not formed under the BCA will be continued as XXXXXXXXXX corporation prior to the undertaking of the transactions described in Paragraphs 58 to 62.

58.1. Prior to the Amalgamation, Newco will own shares in Corporation 1, Corporation 12, Corporation 6, Corporation 7, Corporation 3, Corporation 2, Corporation 10, Corporation 11, Corporation 19 and Corporation 18 XXXXXXXXXX each of which will be held on capital account.

59.   The Predecessor Corporations will amalgamate to form Amalco XXXXXXXXXX pursuant to XXXXXXXXXX.

60.   As a result of the Amalgamation, all the property (except amounts receivable from any Predecessor Corporation, or shares of the capital stock of any Predecessor Corporation) owned by each Predecessor Corporation immediately before the Amalgamation including, without limiting the generality of the foregoing, the Newco XXXXXXXXXX Non-Voting Preference Shares, will become property of Amalco XXXXXXXXXX.  In addition, all the liabilities (except amounts payable to any Predecessor Corporation) owed by each Predecessor Corporation immediately before the Amalgamation will become a liability of Amalco XXXXXXXXXX on the Amalgamation.

61.   Upon the Amalgamation: (i) Newco will receive XXXXXXXXXX common shares, XXXXXXXXXX Class B voting preference shares in Amalco XXXXXXXXXX and Amalco XXXXXXXXXX preferred shares, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX preference shares in Corporation 18 which have an aggregate FMV of $XXXXXXXXXX; (ii) Corporation 23 will receive Amalco XXXXXXXXXX preferred shares, the terms and conditions of which will be identical to the terms and conditions of the Corporation 12 XXXXXXXXXX non-voting preference shares which have an aggregate FMV of $XXXXXXXXXX, and Amalco XXXXXXXXXX preferred shares, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX preference shares in Corporation 7 which have an aggregate FMV of $XXXXXXXXXX and (iii) Corporation 22 will receive Amalco XXXXXXXXXX preferred shares, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX non-voting preference shares in Corporation 19 which have an aggregate FMV of $XXXXXXXXXX.

The Amalco shares to be received by Newco, Corporation 23 and Corporation 22 will be held on capital account.

62.   The PUC of all the Amalco XXXXXXXXXX shares to be issued upon the Amalgamation will not exceed the total of all amounts each of which is the PUC in respect of a share (except a share held by any other Predecessor Corporation) of the capital stock of a Predecessor Corporation immediately before the Amalgamation.

Day 7

Corporation 22’s transfer of Amalco XXXXXXXXXX shares to Newco

63.   Corporation 22 will transfer its Amalco XXXXXXXXXX shares to Newco in exchange for XXXXXXXXXX preference shares in Newco each of which is redeemable and retractable at a price of $XXXXXXXXXX per share, the terms and conditions of which will be identical to the terms and conditions of the XXXXXXXXXX non-voting preference shares in Corporation 19. The aggregate FMV of the preference shares in Newco to be issued to Corporation 22 will be equal to the FMV of the Amalco XXXXXXXXXX shares that will be transferred to Newco.

Corporation 22 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Amalco XXXXXXXXXX shares to Newco.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the Amalco XXXXXXXXXX shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the cost to Newco of the Amalco XXXXXXXXXX shares less the amount of liabilities, if any, to be assumed by Newco. For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

Corporation 23’s transfer of Amalco XXXXXXXXXX shares to Newco

64.   Corporation 23 will transfer its Amalco XXXXXXXXXX shares to Newco in exchange for preference shares in Newco, the terms and conditions of which will be identical to the terms and conditions of: (i) the XXXXXXXXXX non-voting preference shares in Corporation 7 and whose aggregate FMV will be equal to $XXXXXXXXXX and (ii) the Corporation 12 XXXXXXXXXX non-voting preference shares which have an aggregate FMV of $XXXXXXXXXX.  The aggregate FMV of the preference shares in Newco to be issued to Corporation 23 will be equal to the FMV of the Amalco XXXXXXXXXX shares that will be transferred to Newco.

Corporation 23 and Newco will jointly elect in prescribed form and within the time limits prescribed in subsection 85(6) to have the provisions in subsection 85(1) apply to the transfer of the Amalco XXXXXXXXXX shares to Newco.  The Agreed Amount in respect of the transfer will not be greater than the aggregate FMV of the Amalco XXXXXXXXXX shares at the time of the transfer.  The Agreed Amount will not be less than the lesser of the amounts specified in subparagraphs 85(1)(c.1)(i) and (ii).

The aggregate amount added to the Stated Capital of the preference shares in Newco will not exceed the cost to Newco of the Amalco XXXXXXXXXX shares less the amount of liabilities, if any, to be assumed by Newco.  For greater certainty, the increase to the Stated Capital of the preference shares in Newco will not exceed the aggregate maximum amount that could be added to the Stated Capital of such shares without a consequential adjustment being made pursuant to subsection 85(2.1).

After the transfer of shares described in this paragraph, Amalco XXXXXXXXXX will be Newco’s wholly-owned subsidiary.

Dissolution of Amalco XXXXXXXXXX

65.   Amalco XXXXXXXXXX will reduce the Stated Capital of all its classes of shares to $XXXXXXXXXX without making any payment to its shareholders.

66.   Amalco XXXXXXXXXX will Wind-up into Newco and will distribute all its assets to Newco on the Wind-Up including, without limiting the generality of the foregoing, the Newco XXXXXXXXXX Non-Voting Preference Shares.

67.   Newco will cancel the Newco XXXXXXXXXX Non-Voting Preference Shares that it will receive from Amalco XXXXXXXXXX on the Wind-Up.

68.   Amalco XXXXXXXXXX will file Articles of Dissolution in due course.

OTHER INFORMATION:

The Foundation will use the proceeds from the sale of the Donated Shares described in paragraph 45 to make gifts to each of the Donees.  These gifts represent the second installment of an aggregate commitment of $XXXXXXXXXX as described in a donor agreement dated XXXXXXXXXX between the Foundation and the Donees.  XXXXXXXXXX.

PURPOSE OF THE PROPOSED TRANSACTIONS:

XXXXXXXXXX.

The objectives of the Proposed Transactions are as follows:

1) XXXXXXXXXX.

2)    To make a donation of Corporation 17 shares to the Foundation followed by a reacquisition of those shares. The donation will be made by Holdco 3 and consequently, will reduce the value of Trust 3’s interest XXXXXXXXXX.

RULINGS:

A.    Subject to the application of subsection 69(11), provided that the appropriate elections are filed in the prescribed form and manner within the time limits specified in subsection 85(6) and provided that each particular property described below is an Eligible Property in respect of which shares have been issued as full or partial consideration therefor, the provisions of subsection 85(1) will apply to:

(a)   Corporation 25’s transfer of all of its shares of Corporation 19 to Holdco 1 as described in Paragraph 25;

(b)   Corporation 25’s transfer of all of its shares of Corporation 2, Corporation 3, Corporation 10 and Corporation 11 to Holdco 2 as described in Paragraph 25.1;

(c)   Corporation 25’s transfer of all of its shares of Corporation 7 to Holdco 3 as described in Paragraph 25.2;

(d)   Corporation 25’s transfer of all of its shares of Corporations 1 and 12 to Holdco 4 as described in Paragraph 25.3;

(e)   Trust 1’s transfer of all of its shares in Corporation 19 to Holdco 1 as described in Paragraph 26;

(f)   Trust 4’s transfer of all of its shares in Corporation 2 and Corporation 3 to Holdco 2 as described in Paragraph 27;

(g)   Trust 3’s transfer of all of its shares in Corporation 6 to Holdco 3 as described in Paragraph 28;

(h)   C’s transfer of the common shares XXXXXXXXXX in Corporation 1 to Holdco 4 as described in Paragraph 29;

(i)   B’s transfer of the common shares XXXXXXXXXX in Corporation 1 to Holdco 4 as described in Paragraph 30;

(j)   E’s transfer of the common shares XXXXXXXXXX in Corporation 1 to Holdco 4 as described in Paragraph 31;

(k)   F’s transfer of the common shares XXXXXXXXXX in Corporation 1 to Holdco 4 as described in Paragraph 32;

(l)   Corporation 4’s transfer of all of its shares in Corporation 12 to Holdco 4 as described in Paragraph 33;

(m)   Corporation 13’s transfer of all of its shares in Corporation 12 to Holdco 4 as described in Paragraph 34;

(n)   Corporation 14’s transfer of all of its shares in Corporation 12 to Holdco 4 as described in Paragraph 35;

(o)   Corporation 9’s transfer of all of its shares in Corporation 12 to Holdco 4 as described in Paragraph 36;

(p)   D’s transfer of all of the shares XXXXXXXXXX in Corporation 12 to Holdco 4 as described in Paragraph 37;

(q)   Spouse Trust’s transfer of all of its shares in Corporation 12 to Holdco 4 as described in Paragraph 38;

(r)   Corporation 16’s transfer of all of its Class XXXXXXXXXX and Class XXXXXXXXXX shares in Corporation 17 to Newco Corporation 16 as described in Paragraph 40;

(s)   Corporation 15’s transfer of certain of its assets including XXXXXXXXXX Class XXXXXXXXXX shares in Corporation 17 to Newco Corporation 15 as described in Paragraph 42;

(t)   Corporation 18’s transfer of the Donated Shares to Holdco 3 as described in Paragraph 43;

(u)   Newco Corporation 15’s transfer of the Transferred Shares to Holdco 3 as described in Paragraph 47;

(v)   Corporation 25’s transfer of all of its shares in Corporation 18 to Newco as described in Paragraph 50;

(w)   Trust 2’s transfer of all of its shares in Corporation 18 to Newco as described in Paragraph 51;

(x)   Corporation 19’s transfer of all of its shares in Corporation 18 to Newco as described in Paragraph 52;

(y)   Holdco 1’s transfer of all of its shares in Corporation 19 to Newco as described in Paragraph 54;

(z)   Holdco 2’s transfer of all of its shares in Corporation 2, Corporation 3, Corporation 10 and Corporation 11 to Newco as described in Paragraph 55;

(aa)  Holdco 3’s transfer of all of its shares in Corporation 6 and Corporation 7 to Newco as described in Paragraph 56;

(bb)  Holdco 4’s transfer of all of its shares in Corporation 1 and Corporation 12 to Newco as described in Paragraph 57; 

(cc)  Corporation 22’s transfer of all of its Amalco XXXXXXXXXX shares to Newco as described in Paragraph 63; and

(dd)  Corporation 23’s transfer of all of its Amalco XXXXXXXXXX shares to Newco as described in Paragraph 64.

such that the Agreed Amount in respect of each transfer of Eligible Property will be deemed pursuant to paragraph 85(1)(a) to be the transferor’s proceeds of disposition and the transferee’s cost thereof pursuant to paragraph 85(1)(a).  For greater certainty, paragraph 85(1)(e.2) will not apply to the aforementioned transfers of property.

B.    Subsection 74.4(2) will not apply to deem any of the individual transferors in Paragraphs 26 to 32 (inclusively), 37, 38 and 51 to have received any amount on account of interest as a result of the transfers described in those paragraphs.

C.    Subject to the limitations and other restrictions found in section 110.1, provided that an official receipt containing prescribed information is filed as required by subsection 110.1(2), and further provided that the conditions in subsection 248(30) are met, the transfer of the Donated Shares by Holdco 3 to the Foundation will be considered a gift for purposes of paragraph 110.1(1)(a) and the eligible amount of the gift under subsection 248(31) will be the FMV of the Donated Shares at the time the gift is made less the amount of the advantage, if any, in respect of the gift as defined in subsection 248(32).

D.    Provided that the Donated Shares are capital property to Holdco 3, no portion of the capital gain arising from the disposition of the Donated Shares, if any, resulting from the making of the gift of the Donated Shares to the Foundation will be included in computing Holdco 3’s Taxable Capital Gain pursuant to paragraph 38(a.1).

E.    The full amount of the Capital Gain arising from the disposition of the Donated Shares on the Donation will be added to the CDA of Holdco 3 pursuant to clauses (a)(i)(A) and (a)(i)(B) of the definition of CDA.

F.    On the Amalgamation:

(a)   The provisions of subsections 87(1) and 87(2.1) will apply such that Amalco XXXXXXXXXX will be deemed to be the same corporation and a continuation of each Predecessor Corporation for the purposes of determining Amalco XXXXXXXXXX Non-Capital Loss and Net Capital Loss for any taxation year;

(b)   The provisions of subsection 87(3) will not apply to the extent that the PUC in respect of all the shares of the capital stock of Amalco XXXXXXXXXX immediately after the Amalgamation does not exceed the total of all amounts each of which is the PUC in respect of a share (except a share held by any other Predecessor Corporation) of the capital stock of a Predecessor Corporation;

(c)   Provided that the shares of the capital stock of any of the Predecessor Corporations were Capital Property to their holder immediately before the Amalgamation, the provisions of subsection 87(4) other than paragraphs (c), (d) and (e) thereof will apply, such that shareholders (except any Predecessor Corporation) who owned shares of the capital stock of a Predecessor Corporation, and who received no consideration for the disposition of those shares on the Amalgamation other than shares of the capital stock of Amalco XXXXXXXXXX:

(i)   will be deemed by paragraph 87(4)(a) to have disposed of their shares for proceeds of disposition equal to the ACB of such shares immediately before the Amalgamation; and

(ii)  will be deemed by paragraph 87(4)(b) to have acquired their shares of Amalco XXXXXXXXXX at an aggregate cost equal to those proceeds of disposition with such aggregate cost being allocated to any particular class of Amalco XXXXXXXXXX shares using the allocation formula described in subparagraphs 87(4)(b)(i) and (ii);

(d)   The cancellation of the shares of any Predecessor Corporation held by another Predecessor Corporation on the Amalgamation will not give rise to a gain or a loss in the hands of the former corporation; and

(e)   The provisions of subsection 87(7) will apply to a debt or other obligation of any Predecessor Corporation that was outstanding immediately before the Amalgamation that becomes a debt or other obligation of Amalco XXXXXXXXXX on the Amalgamation where the amount payable by Amalco XXXXXXXXXX on the maturity of such debt or other obligation, as the case may be, is the same as the amount that would have been payable by each such Predecessor Corporation on the maturity of such debt or other obligation.

G.    Subject to subsection 69(11), the provisions of subsection 88(1) will apply to the Proposed Transactions such that:

(a)   Pursuant to subparagraph 88(1)(a)(iii), each property of Amalco XXXXXXXXXX that will be distributed to Newco on the Wind-Up will be deemed to have been disposed for proceeds equal to the Cost Amount of the property to Amalco XXXXXXXXXX immediately before the Wind-Up; and

(b)   Newco will be deemed to have disposed of all its shares in Amalco XXXXXXXXXX on the Wind-Up for proceeds equal to the greater of the amounts described in subparagraphs 88(1)(b)(i) and (ii).

For greater certainty, subsection 84(2) will not apply to the Wind-Up with respect to the property acquired by Newco on the Wind-Up pursuant to paragraph 88(1)(d.1).

H.    The cancellation of the Newco XXXXXXXXXX Non-Voting Preference Shares upon their distribution to Newco on the Wind-Up will not give rise to a deemed dividend under subsection 84(3).

I.    The provisions of subsections 15(1), 56(2), 56(4), 69(1), 69(4), 105(1) and 246(1) will not apply to any of the transfers described in Paragraphs 25 to 32 (inclusively), 37, 38, 51, 54, 55, 56, and 57 in and by themselves, and

J.    Subsection 245(2) will not apply as a result of the Proposed Transactions, in and by themselves, to re-determine the tax consequences confirmed in the rulings given above.

These rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R6 issued on August 29, 2014, and are binding on the CRA, provided that the Proposed Transactions are completed within six months of the date of this letter.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments to the Act, which if enacted, could have an effect on the rulings provided herein.

COMMENTS:

Nothing in this letter should be construed as implying that the CRA has confirmed, reviewed, made any determination or accepted any method for the determination in respect of:

(a)   The PUC of any shares or the FMV or the ACB of any particular asset referred herein,

(b)   The balance of CDA, RDTOH, non-capital losses, net capital losses, charitable gifts or any other tax account of any corporation,

(c)   Whether the Donated Shares held by Holdco 3 are capital property to Holdco 3;

(d)   The FMV or ACB of the Donated Shares;

(e)   Whether there is an advantage to Holdco 3 or a person or partnership not dealing at arm’s length with Holdco 3 in respect of the gift of the Donated Shares to the Foundation within the meaning of subsection 248(32).  It is a question of fact whether any advantage exists.  Where there is an advantage in respect of the gift of the Donated Shares, the FMV of that advantage must be ascertained in determining the eligible amount of the gift under subsection 248(31) for the purposes of Ruling C above;

(f)   Any other tax consequences relating to the Facts, Proposed Transactions or any event taking place either prior to or subsequent to the Proposed Transactions whether described in this letter or not, other than those specifically described in the above Ruling.

An invoice for our fees in connection with this ruling request will be forwarded to you under separate cover.

Yours truly,

XXXXXXXXXX
Reorganizations Division
Income Tax Ruling Directorate
Legislative Policy and Regulatory Affairs Branch

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