Bacanora Canada effectively will migrate to the UK through a 3-party share exchange

Bacanora Canada, whose key assets are Mexican subsidiaries holding lithium properties, is listed on the TSX, but its shares mostly trade on the AIM. It will effectively migrate to the UK under an Alberta Plan of Arrangement under which there will be a triangular exchange of shares with a newly-formed UK company (Bacanora UK) and a wholly-owned Alberta sub of Bacanora UK (Acquireco), so that the Bacanora Canada shareholders transfer their shares to Acquireco, Acquireco issues shares to Bacanora UK and Bacanora UK issues shares to the Bacanora Canada shareholders – with Bacanora Canada and Acquireco then amalgamating.

This exchange will occur on a taxable basis for Canadian purposes – and the AIM qualifies as a designated exchange for RRSP eligibility purposes. The U.S. tax disclosure indicates that there is substantial uncertainty as to whether the transaction qualifies as a s. 351 reorg given that there is a plan for Bacanora UK to do a substantial equity raise.

The corporation tax rate applicable to Bacanora UK’s taxable profits is currently 19% and from April 2020, will reduce to 17%. The UK rate of capital gains tax on disposal of Bacanora UK shares by basic rate taxpayers will be 10% and, for upper rate and additional rate taxpayers, will be 20% (I vaguely recall rates in Ontario being higher.)

Neal Armstrong. Summary of Bacanora Canada Circular under Other – Continuance/Migrations – New Non-Resident Holdco.