W D Gray and R S Whitley, Gray’s Commentaries on Federal Corporate Laws volume 3 (Toronto: Thomson Reuters 2020) (loose-leaf updated 2020 release 9), in LM-CBCA:21, discuss section 30 of the Canada Business Corporations Act. In general terms, the section prohibits a corporation from holding shares in itself or in its parent corporation. The restrictions also apply to the holding of a beneficial interest.
The authors point out, however, that the rule is predicated on legal control. If Holdco does not have legal control of Opco and Opco does not have legal control of Holdco, Opco can own issued shares of Holdco. Accordingly, it appears that a trust cannot hold all of the issued shares of a corporation (Holdco) where Holdco is also a beneficiary of the trust. The trust can own all of the issued non-voting Common Shares in the capital of Holdco where Mr X holds all of the voting, nominal-value shares of the corporation.
