The Tax Court of Canada (the "Court")
recently rendered a decision in the case of
PricewaterhouseCoopers Inc. agissant ès qualité
de syndic à la faillite de BioArtifi cial Gel Technologies
Inc. (Bagtech) c. Sa Majesté la faillite de BioArtificial
Gel Technologies Inc. (Bagtech) c. Sa Majesté La
Reine1 on the impact of a unanimous
shareholders' agreement ("USA") on
the status of a corporation as a "Canadian controlled private
corporation" ("CCPC") within the
meaning of the Income Tax Act (Canada)
("ITA").
The central issue before the Court was to determine what impact
Bagtech's USA had on its status as a CCPC (under subsection
125(7) ITA). More specifically, the Court had to decide whether the
provisions of the USA, which provided that the non-resident
shareholders could not elect a majority of the members of the
corporation's board of directors, were sufficient for Bagtech
to be considered a CCPC despite the fact that its non-resident
shareholders held a majority
