12 May 1995 Internal T.I. 9513226 - PAID-UP CAPITAL

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Meeting with L'Ordre des Comptables agréés du Québec
Question #4

IT-96R5 - Options donnés par une corporation pour l'acquisition d'actions, d'obligations ou de débentures

Le Ministère considère-t-il modifier le paragraphe 4, compte tenu du fait que l'inclusion au capital versé pourrait être un montant moindre en vertu du droit corporatif?

Department’s position

We agree that the amount of the consideration received by a corporation on the exercise of an option to acquire shares of its capital which will be included in its paid-up capital will depend on the amount which the corporation has added to its legal stated capital account for corporate law purposes. Since the corporate law of most jurisdictions in Canada requires the corporation to add the full amount of any consideration which it receives for the issue of its shares to the relevant stated capital account (with certain exceptions for shares issued to non-arm's length parties or shares issued in exchange for shares of non-arm's length corporations), the amount paid on the exercise of an option to acquire shares will usually form part of the corporation's paid-up capital. This will be clarified in IT-96R6 which is currently in process.

Author:     T. Harris
File:       951322
Date:       May 12, 1995