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.
Question 25 - Shareholders' Agreement - Term Preferred Shares
Shareholders' agreements may include provisions which require that a shareholder wishing to sell his shares may only do so if the same offer is made by the prospective purchaser to the other shareholders. These are often referred to as "piggyback" rights. Does the provision of such rights in a shareholders' agreement cause the shares to be term preferred shares?
Department's Response
It is a question of fact whether provisions of a particular agreement in respect of a share would cause the share to be a term preferred share. This question could only be resolved by examining the particular share rights and agreement. In general, however, the wording of subparagraphs (a)(i) and (ii) of the definition of term preferred share in subsection 248(1) would be broad enough to include a share with such "piggyback" rights.
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