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Corporation Owned Outstanding Shares


#1

Hi,

I have a new client where their lawyers have drafted their shareholder’s agreement as followed:

Parties / Shares percentage
A - 20%
B - 20%
C - 10%
D - 10%
E - 20%
Outstanding 20%

In such case, how should this be reported on Schedule 50; in particular, how should the outstanding 20% be reported.


#2

Per the instructions at the top of the S50, you have to report only shareholders who hold 10% or more of the shares. (I assume that means “votes and value”?) So, if the “Outstanding” includes a large number of shareholders, you can ignore them on the S50.


#3

Sorry, my question was worded poorly.

What I meant was that Shareholders (A/B/C/D/E) totally owned 80% of the shares, which individually will be reported on S50, that’s no doubt.

My question is how to report the remaining 20% of shares owned by the corporation itself (treasury shares).

I have never seen a shareholder agreement structure such as way and any input is much appreciated.

Many thanks,


#4

@kingsmen.assetmgt
When you say that shares are “outstanding” it means they have been ISSUED to someone - not held by the corporation.
S50 is just for reporting the share-HOLDERS. If the shares have not been issued to anyone, then nobody is “holding” them, so for tax purposes they don’t exist.
Make sense?:slightly_smiling_face:


#5

Yes, that is exactly what I think. I think the paralegal/lawyer made a mistake when setting up the agreement. Thanks for confirming!