Spin-off Structure

"Suppose that a wholly owned Holdco of an individual owns 100% of Opco and 70% of Subco, with the remaining 30% held by unrelated persons. In order to spin-off the 70% shareholding:\n\nthe individual rolls a portion of his Holdco shares to a Newco;\n\nHoldco rolls its 70% shareholding to Newco in exchange for Newco shares; and\n\nthe cross-shareholdings are redeemed.\n\nGiven inter alia that the 30% shareholding of the unrelated persons is unaffected, none of ss. 55(3)(a)(i) to (v) are engaged, and the s. 55(3)(a) exemption applies.\n\nHowever if, as a final step, Newco and Subco amalgamate, s. 55(3)(a)(ii) instead will be triggered because the unrelated persons, by receiving shares of Amalco, will effectively be deemed under s. 55(3.01)(b) to have acquired a 30% interest in Newco."