Exceptions from Subsection 55(2) - CCH Canadian

Pro-Rata Distribution Requirement —Spin-off Butterfly ExampleShareholder(s)Transferee40%DC60%Asset 1(40% of net FMV)Asset 2(60% of net FMV)• In earlier spin-off butterfly example, Transferee became 40% shareholder of DC• DC was required to transfer or “distribute” 40% of each type of property (net ofliabilities) to Transferee© 2010 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is aSwiss entity with which the independent member firms of the KPMG network are affiliated 37