Peter Lee, Paul Stepak, "PE Investments in Canadian Companies", draft 2017 CTF Annual Conference paper

Application of 10%-of-voting power test where sister companies held through holding “Aggregator” LP (pp. 5, 9)

[A] PE fund limited partnership...

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Use of holding “Aggregator” LP to hold CFAs may generate FAPI (pp. 9-10)

The potential FAPI issue arises from the fact that the income of the...

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Potential adverse thin cap consequences of U.S. lenders pushing for a single U.S. borrower (pp. 10-11)

One of the Canadian tax issues that can...

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No s. 245(4) abuse where use of a Canadian GP to avoid FAD rules (pp. 15, 16)

[T]he purpose of the FAD rules is to deter foreign multi-nationals...

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Potential unavailability of “bump and run” where management are expected to retain interest in company (p. 15)

Where Target is a 10(f)...

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No relief for a non-s. 87(11) amalgamation of Acquireco, Target and Target subs (p. 15)

[T]here is no explicit relief for an amalgamation is not...

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Quaere whether FAD rules apply to a non-s. 87(11) amalgamation (pp. 15-16)

[T]here is no explicit relief for an amalgamation is not described in...

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Scope of requirement for exercise of principal decision-making authority under more closely connected business (MCCB) activities exception...

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Difficulty in having employee optionholders share in post-closing adjustments (p. 24)

Sellers, especially PE sellers, will often expect that...

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Difficulty of determining FMV of management’s optioned shares where they rank lower in the waterfall (pp.20-21)

[S]tock options are typically...

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Use of s. 256(9) election for seller of Target to get benefit of debt repayment by Target immediately before the closing (pp. 22-23)

The payoff of...

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Efficacy of payments by direction (p. 24)

[W]ires are often made directly from the source of the funds (e.g. the PE [private equity] fund capital...

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Difficulty of determining FMV of management’s optioned shares where they rank lower in the waterfall (pp.20-21)

[S]tock options are typically...

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