2000 Ruling 2000-0015933 - Supplementary - 1999-001121

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Supplementary to 1999-001121

Position: n/a

Reasons: n/a

XXXXXXXXXX
XXXXXXXXXX 2000-001593
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 2000

Dear Sirs:

Re: XXXXXXXXXX ("XXXXXXXXXX/Aco")
XXXXXXXXXX ("XXXXXXXXXX/Bco")
Advance Income Tax Ruling

This is in reply to your letter of XXXXXXXXXX, in which you requested an additional opinion and certain changes to the facts and proposed transactions described in our letter of XXXXXXXXXX, our file No. 1999-001121 (the "Ruling"). Terms defined in the Ruling to have a certain meaning have the same meaning when used in this letter.

As a result of your letter the following changes are made to the Ruling:

1. Paragraph 21, sixth complete paragraph, second line, delete the word "exercisable" and replace with "exercise".

2. Subparagraph 42(b), fourth line, after the words "XXXXXXXXXX/Cco Options" add the following words "without regard to the applicable vesting provisions".

3. Paragraph 44, delete the preamble and replace with the following:

"If XXXXXXXXXX/Aco is satisfied that it has received, on a timely basis, sufficient detailed information in respect of the safe income on hand attributable to the XXXXXXXXXX/Bco Common Shares, and that the quantum of such safe income on hand is material to XXXXXXXXXX in the circumstances, XXXXXXXXXX/Cco will, through one or more increases in stated capital:"

4. Paragraph 44, subparagraphs (a) and (b), delete the reference to "paragraph 42" and replace with "paragraph 41".

5. Paragraph 46, third line, add the following words to the end of the sentence:

"unless otherwise specified herein."

6. Paragraph 55, add the following paragraph:

"XXXXXXXXXX/Ico will add an amount to the stated capital account in respect of the XXXXXXXXXX/Ico Common Shares up to but not exceeding the paid-up capital of the exchanged XXXXXXXXXX/Bco Common Shares."

7. Paragraph 58, after the second paragraph add the following paragraph:

"The aggregate number of XXXXXXXXXX/Ico Common Shares issuable upon the exercise of any XXXXXXXXXX/Ico XXXXXXXXXX/Aco Stock Options could include a fraction of a share. Since fractional Shares of XXXXXXXXXX/Ico will not be issued, the exercise of a XXXXXXXXXX/Ico XXXXXXXXXX/Aco Stock Option in respect of a fraction of a XXXXXXXXXX/Ico Common Share will be deferred until the final exercise of all options issued under the particular plan, at which time the XXXXXXXXXX/Aco Optionholder will be permitted to acquire the remaining fraction of a XXXXXXXXXX/Ico Common Share not subject to the holder's XXXXXXXXXX/Ico XXXXXXXXXX/Aco Option by payment of a cash amount equal to the fair market value of such remaining fraction."

8. Subparagraph 60(b), fourth line, after the words "applicable to the holder" add the following words "without regard to the applicable vesting provisions".

9. Paragraph 61, delete and replace with:

"The XXXXXXXXXX/Ico Common Shares will be subdivided on a two-for-one basis effective at the close of business of the XXXXXXXXXX trading day after the Effective Date."

10. Paragraph 62, delete and replace with:

"The XXXXXXXXXX/Ico Board authorized XXXXXXXXXX/Ico to adopt a shareholder rights plan similar to the shareholder rights plan described in paragraph 30. Provided the required shareholder approval is obtained, which approval will be considered in a vote separate from approval of the Plan of Arrangement, rights to acquire XXXXXXXXXX/Ico Common Shares will be issued under such shareholder rights plan to all holders of XXXXXXXXXX/Ico Common Shares at the close of business on the XXXXXXXXXX trading day after the Effective Date."

11. Include in the Opinions given:

"2. It is our opinion that:

(i) the safe income on hand of XXXXXXXXXX/Bco attributable to the XXXXXXXXXX/Cco Preferred Shares will include the portion of the safe income on hand of XXXXXXXXXX/Bco attributable to the XXXXXXXXXX/Bco Common Shares held by XXXXXXXXXX immediately before the transfer to XXXXXXXXXX/Cco as described in paragraph 41; and

(ii) the safe income on hand of XXXXXXXXXX/Bco attributable to all of the XXXXXXXXXX/Cco Common Shares will include the safe income on hand of XXXXXXXXXX/Bco attributable to all the XXXXXXXXXX/Bco Common Shares held by XXXXXXXXXX/Cco immediately before the stated capital increases described in paragraph 44 less an amount representing the safe income on hand of XXXXXXXXXX/Bco attributable to the XXXXXXXXXX/Cco Preferred Shares."

We confirm that the additional opinion and changes described above will not affect the rulings given in he Ruling and will continue to be binding as indicated therein.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch