Example 1
A has two adult children, C and D. C has two children, X and Y, and D has one child, Z. A owns all of the issued and outstanding shares of Aco, consequently, A controls Aco. Each of Y and Z owns 50% of the common shares of Opco. Since Y and Z are cousins, they will, for purposes of the Act,
be an unrelated group that controls Opco. As A is related to each of Y and Z (i.e. A is their grandparent), Aco and Opco will be related pursuant to subparagraph 251(2)(c)(iv)
Corporations and Other Persons
11.Paragraphs 251(2)(b) and (c) set out the statutory rules for determining when a corporation and another person will be considered to be “related persons” (or persons related to each other) for purposes of the Act. Under paragraph 251(2)(b), a corporation will be related to another person
(including another corporation) where:
(a) that person controls the corporation;
(b) that person is a member of a related group that controls
the corporation; or
(c) that person is a person who is related to a person
described in (a) or (b) above.
In addition, paragraph 251(2)(c) provides that two
corporations will be related if:
(i) the two corporations are controlled by the same
person or group of persons;
(ii) each of the corporations is controlled by one
person and the person who controls one
corporation is related to the person who controls
the other corporation;
(iii) one of the corporations is controlled by one
person and that person is related to any member
of a related group that controls the other
corporation;
(iv) one of the corporations is controlled by one
person and that person is related to each member
