RE:RE:Plan of Arrangement on Sedar for September 23Dispersing funds this way, although more complex, results in lower tax payable for the shareholder (if the shares are not in an rrsp or tfsa). If they returned the money as a special dividend, the entire amount would be taxable. Using this method approximately 50% becomes taxable as a dividend while the remaining amount would be taxable according to ones adjusted cost base. I would guess that the majority of people would have an adjusted cost base, myself included, higher than $6.36 so would end with a capital loss that can be used to offset other gains. According to tax law, if a company buys shares back at a price above their paid up capital (puc), the amount paid above the puc is deemed to be a dividend. Can't argue with RCA on that.
One may argue that the company is taking some of your shares for a dividend, which in effect they are and it sounds crazy. However, every shareholder will need to tender 30% of their shares so everyones percent ownership in the company remains as before, and would be similar to a stock consolidation.