In Neil Armstrong’s summary of a butterfly ruling (2014-0533601R3), he wrote:
The reorganization started off in the usual manner with a s. 86 reorg under which the DC shareholders exchanged their old common and preferred shares for special “butterfly” shares and new common shares. The new common shares’ attributes were accepted as being different from those of the old shares on the basis of a more restricted right to receive stock dividends and on the basis of a right of the holders to receive quarterly financial statements. (This may have resulted from CRA prodding, as there is an inserted paragraph number for this.)
DC was a corporation under the CBCA. The foregoing is interesting because it shows that the CRA is holding fast to its view that classes of shares must be distinguished by their rights and because it shows the kinds of differences in rights that the CRA might be willing to accept for the purposes of making such a distinction.
