Words and Phrases - "absolute"

LP #1, whose limited partner (“Corporation”) was a specified financial institution, had its shares of a corporation (“Group") redeemed, giving rise to a deemed dividend to Corporation. The Directorate found that Corporation had a contingent right to acquire control of Group by virtue of a “Death” clause in the shareholders’ agreement for Group, so that the redeemed shares were deemed to be term preferred shares under para. (b) of the definition. Such clause provided that, in the event of Mr. X's death before the termination of the agreement, Group shall purchase all of the shares held by Mr. X and his holding company (which currently was the controlling shareholder of Group) if the fair market value of the shares was equal to or less than the insurance proceeds collected on Mr. X's life, or shall have the option, at the Corporation's option, to redeem such shares if the fair market value of the shares exceeded such insurance proceeds.

In so concluding, the Directorate stated:

We are of the view that it is sufficient that a person described in paragraph (b) of the definition of term preferred share has a conditional or unconditional right to control the issuer or a conditional or unconditional right to acquire control of the issuer, for the shares to qualify as term preferred shares.

… [U]nlike paragraph 251(5)(b), the definition of term preferred share does not contain the exception that applies where one or more of the rights referred to in that provision cannot be exercised at that time because the exercise of the rights in question depends on the death, bankruptcy or permanent disability of an individual.