Principal Issues: Whether: (1) subsection 85.1(1) applies to the share for share exchange pursuant to which Acquireco would acquire all the shares that each member of Targetco holds in exchange for shares in Acquireco; (2) subsection 88(1) applies to the transfer of the rights, property and assets of Targetco distributed to Acquireco on the dissolution of Targetco; and (3) subsection 137(4.1) applies to Targetco's transfer of its rights, property and assets to Acquireco on the winding-up
Position: (1) Yes; (2) Yes; (3) No
Reasons: (1) Subsection 85.1(1) applies to the exchange pursuant to which the vendor exchanges shares in Targetco for shares in Acquireco; (2) For the purposes of paragraph 88(1)(a), we should consider that not less than 90% of the issued shares in the subsidiary will be held by the parent "immediately before the winding-up" since all the shares of the subsidiary will be owned by the parent prior to the transfer of its assets and the assumption of its liabilities, and its ultimate dissolution; (3) Acquireco will not become a member of Targetco, as that term is defined in subsection 137(6), at any point in time during the process leading to Targetco' dissolution
