CRA considers shares of Targetco now held 100% by Acquisitionco, and with a formal delisting imminent, to still be listed
There is a problem in the wording of the definition of a public corporation. Even if a heretofore public corporation has made a good election under (c)(i) of that definition to cease to be a public corporation, it will continue to be a public corporation under para. (a) of the definition at that time if its shares are still listed. Accordingly, the Joint Committee has submitted that para. (a) should be amended by adding a proviso that the corporation nonetheless will not be considered to be a public corporation under para. (a) if it ceased to be a public corporation under para. (c) because of a valid election or designation.
The background is this. 2017-0723771C6 indicated that where Acquisitionco acquired all the shares of Targetco, a public corporation, and immediately amalgamated with it, Amalco could potentially make an election on behalf of Targetco under (c)(i) of the public corporation definition for Targetco not to be a public corporation so that Amalco was not deemed to be a public corporation under s. 87(2)(ii). This response was problematic because this election could not be made by Amalco until the Targetco shares were delisted, which might take several days to occur, and because CRA needed to accept that the fact that the Targetco shares no longer existed did not preclude the making of this election (as to which it was prepared to rule on a case-by-case basis rather than giving any blanket assurances).
CRA recently declined to give a Technical Interpretation that if, shortly before the amalgamation of Targetco with Acquisitionco, Acquisitionco held all the Targetco shares and the Stock Exchange had been notified to delist the shares, the Targetco shares would not be considered to be listed for purposes of paragraph (a) of the definition of public corporation.
Neal Armstrong. Summary of 4 March 2019 Joint Committee Submission on Definition of “Public Corporation” under s. 89(1) - public corporation – para. (a).