Principales Questions: 1) Whether Class X shares of a given corporation meet the conditions of subparagraph 6204(1)(a)(iii) of the Regulations in the following context: (a) The Class X shares can be converted into Class Y shares and vice versa; and (b) The Class Y shares do not satisfy the conditions provided in subparagraph 6204(1)(a)(ii) of the Regulations. 2) Whether conditions of subparagraph 6204(1)(a)(ii) of the Regulations are met in respect of a class of shares when the holder of such shares is entitled to receive, on the liquidation, dissolution or winding-up of the corporation, an amount determined by a specified formula in the share capital of the company, and the distribution is to take place before the remaining property of the corporation is distributed among the shareholders?
Position Adoptée: 1) No. 2) No.
Raisons: 1) The conversion of Class X shares into Class Y shares does not meet the conditions of subparagraph 6204(1)(a)(iii) of the Regulations because the Class Y shares do not comply with subparagraph 6204(1)(a)(ii) of the Regulations. The fact that the Class Y shares can be converted into Class X shares at the shareholder's request does not compensate for this non-compliance. 2) The possibility for a class of shares to benefit from a liquidation entitlement before the distribution of the remaining property of the corporation is not in accordance with subparagraph 6204(1)(a)(ii) of the Regulations, as the amount received on the dissolution, liquidation or winding-up of the corporation is fixed at a minimum amount by way of a formula or otherwise.
