Section 182
Cases
Re HHT Investments Inc., 119 OR (3d) 473, 2014 ONSC 1582
The applicant ("HHT"), which was listed on the TSX Venture Exchange, proposed to reorganize as a publicly traded REIT pursuant to a plan of arrangement under the Business Corporation Act (Ontario), under which (following the formation of Boulevard Industrial REIT (the "REIT") and the formation of "Boulevard LP"):
- The REIT would contribute REIT units to Boulevard LP in exchange for Class A LP units.
- The shares of HHT would be transferred to Boulevard LP in exchange for REIT units – except that shareholders electing for rollover treatment wold exchange their shares instead with Boulevard LP for Class B exchangeable LP units of Boulevard LP.
- The outstanding common shares of HHT would be exchanged under a s. 86 reorganization for new common shares and preferred shares with a paid-up capital equal to net cash on hand, with such preferred shares then being redeemed.
In finding that the proposed plan of arrangement qualified under s. 182 of the OBCA, Brown J stated (at para. 16):
In the broadest sense, the plan involves the reorganization of the structure of a corporate entity, HHT, and arranges the rights of its shareholders and other security holders. While it might be stretching the point to contend that the holders of the common shares of HHT are receiving, in exchange, the securities of "another body corporate", even though Boulevard LP would be acting at the instance of its corporate general partner, Boulevard GP, given the pervasive use of real estate investment trusts in our contemporary economy, I conclude that the key operative portion of the plan – the exchange of securities – constitutes "any other reorganization or scheme involving the business or affairs of the corporation or of any or all of the holders of its securities or of any options or rights to acquire any of its securities that is, at law, an arrangement", within the meaning of OBCA s. 182(1)(h).
Section 242
Cases
460354 Ontario Inc. v. The Queen, 92 DTC 6534 (FCTD)
S.241(1)(a) of the Business Corporations Act, 1982 (Ontario) permitted a corporation which had been dissolved to appeal to the Tax Court and, later, to the Federal Court, from a reassessment issued after the date of dissolution.
See Also
1455257 Ontario Inc. v. The Queen, 2015 TCC 173
The taxpayer was dissolved under s. 241 of the Ontario Business Corporations Act. The Minister assessed the taxpayer pursuant to s. 242. In response to the taxpayer's appeal at the behest of its former principal, the Minister applied to adjourn the appeal for 60 days to allow the taxpayer to be revived under s. 241(5) of the OBCA in order to proceed.
Lyons J granted the Minister's motion. Faced with conflicting authorities on whether s. 242 permits a dissolved corporation to defend against an action brought against it under that section (e.g. 460354 Ontario; Malamas, [2009] OJ No. 4726, 2009 CarswellOnt 6878 (Ont Sup Ct)), she found that GMC Distribution was more persuasive in considering that s. 242 does not permit defence without revival. The GMC line relied on a contextual interpretation while the Malamas line relied on an overly narrow textual interpretation (paras. 29-31).
GMC Distribution Ltd. v. The Queen, 2012 TCC 262
The taxpayer was dissolved pursuant to s. 241 of the Ontario Business Corporations Act for failing to file tax returns. The taxpayer's principal applied for leave to represent the corporation in a tax appeal.
Webb J dismissed the taxpayer's motion. Reliable Life Insurance v. Ingle, [2009] O.J. No. 2312, establishes that, while s. 242(1)(b) empowers the Minister to assess a dissolved OBCA corporation, such a corporation cannot defend itself (in this case, by appealing the assessment) without first being revived under the OBCA.
Webb J also granted the Minister's motion to quash the appeal, as the taxpayer (or its principal) had not prosecuted its appeal with due dispatch, having taken almost no action to further the appeal since 2004
Administrative Policy
7 December 1999 T.I. 1999-0006715
What is Revenue Canada's position in respect of the shareholder's rights to file a Notice of Objection where the corporation has been dissolved? Revenue Canada responded:
Once… a certificate of dissolution is issued…[u]nder section 226 of the CBCA, a civil, criminal, or administrative action or proceeding may be brought against the dissolved corporation within two years after its dissolution as if the corporation had not been dissolved. However, the period of time during which actions can be brought against a corporation differs between jurisdictions… .
… 460354 Ontario Inc. (92 DTC 6534) and Hadi Saraf… (94 DTC 6229), …[involving] the Ontario Business Corporations Act, held that an assessment is an administrative action and therefore a dissolved corporation may be assessed or reassessed, provided the relevant time limit has not expired. This assessment would be under section 152 of the Income Tax Act and would be served in the name of the dissolved corporation on the last known director or other officer of the corporation.
5 July 1994 Memorandum 9414347 [revival first if assessment after 2-year limitation]
If the two-year time limit provided in s. 219(2) of the Business Corporations Act (Alberta) has expired, there is no way the dissolved corporation can be reassessed. Accordingly, revival of the corporation may be necessary.
If the time limit has not expired, the 460354 (92 DTC 6534) and Saraf (94 DTC 6229) cases confirm that the tax return of the dissolved corporation may be assessed without having to revive the corporation. Such assessment would be under s. 152 of the Act and would be served in the name of the dissolved corporation on the director or other officer of the corporation as last shown in notices filed under the Business Corporations Act.