Intergeo (a Russian-controlled sub) is proposing a reverse takeover of Mercator (a CRIC) utilizing restricted board nominations rights and with puts being issued to the Mercator shareholders

Intergeo (a BVI subsidiary of Daselina, which is a BVI holding company of a Russian billionaire) which unsuccessfully attempted to go public two years ago, is now proposing effectively the same thing through a reverse (share-for-share exchange) takeover of TSX-listed Mercator, so that Daselina will own approximately 85% of the post-reorganization Mercator, which in turn will own Intergeo.  The current Mercator shareholders might demur at minority status in a Russian subsidiary.  Accordingly, they are to receive (under s. 86) a right to put their common shares to Mercator for $5 per share during an exercise window of 18 to 30 months following the arrangement's effective date, with $31.7M placed in escrow as security.

Mercator currently has paid-up capital of $400 million, so that even if the foreign affiliate dumping rules apply to Mercator’s investment in Intergeo (and to a Daselina-funded injection of working capital in existing foreign affiliates), Daselina, through PUC averaging, will end up holding common shares with full PUC.  However, the effect of Special Shares to be issued to each of Daselina and a BVI mystery company (Kirkland), is that Daselina and Kirkland will have the right to nominate only three of the nine Mercator board members (but with the other six being nominated by the board itself) – but they also will have veto rights on major decisions.  These shares might result in Daselina not controlling Mercator so as to insulate against application of the FAD rules.  See s. 212.3 - Example 1-E.

Appendix T of the Circular explains that "taxpayers and the Russian tax authorities often interpret tax laws differently."

Neal Armstrong.  Summary of Mercator Circular under Mergers & Acquisitions - Cross-Border Acquisitions - Inbound - Reverse takeovers.