Canada Revenue Agency · Freeze & reorganisation mechanics
Limitation on distributions
What the rule requires
Distributions to the growth shares must not be allowed to strip the corporation below what it needs to redeem the freeze shares.
Authority: Drafting practice (freeze integrity)
What goes wrong
Nothing stops distributions to the growth shares leaving the corporation unable to redeem the freeze shares.
What good looks like
A limitation-on-distributions provision protects the redemption entitlement of the fixed-value shares.
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