Wednesday June 28, 5:52 pm Eastern Time
Press Release
SOURCE: Stamford International Inc.
Stamford International Inc.
TORONTO, June 28 /CNW/ - Stamford International Inc. (OTC, trades reported CDN under STFD) announced that it is
considering the proposed legislation to amend the Income Tax Act (Canada) released by the Minister of Finance on June 22, 2000
regarding the taxation of foreign investment entities (FIEs). The proposed legislation raises issues about the tax treatment of Canadian resident holders of
Stamford Common Shares who would receive Exchangeable Shares and Tail Exchangeable Shares of a Canadian subsidiary of Nanovation Technologies, Inc.
pursuant to the previously announced Plan of Arrangement transaction between Stamford and Nanovation, and also raises issues about the tax treatment of the
post-reorganization structure of Stamford as currently proposed. The proposed legislation could, in certain circumstances, result in such tax treatment being
materially different than as described in Stamford's Management Proxy Circular dated May 19, 2000 for the adjourned meeting of holders of Stamford
Common Shares currently scheduled to be held at Toronto, Ontario on June 30, 2000.
The proposed legislation implements proposals first announced in the 1999 federal budget. The Department of Finance stated that it is seeking comments on
the proposed legislation by September 1, 2000 to enable legislation to be tabled in Parliament later this year. The proposed legislation would generally apply
beginning in 2001.
Under the proposed legislation, an FIE will generally be a non-resident entity that has investment properties representing more than one-half its assets. The
proposed legislation generally requires Canadian resident holders of participating interests in FIEs to treat gains from the disposition of such interests
(including gains accrued prior to 2001) as ordinary income rather than capital gains. The proposed legislation also generally requires such holders to
recognize as income the annual change in value of participating interests in FIEs beginning in 2001 under a "mark-to-market" rule. Under certain limited
circumstances, a bolder may elect alternative treatment. If Nanovation is an FIE at the end of 2001 or any subsequent year, the Exchangeable Shares and Tail
Exchangeable Shares may be regarded as participating interests in an FIE, in which case the proposed legislation may apply to Canadian resident holders of
such shares.
Stamford is in the course of making inquiries as to whether Nanovation is now or is likely in the future to be an FIE. To the extent Nanovation is not and does
not become an FIE, the proposed legislation would not apply to Exchangeable Shares, Tail Exchangeable Shares or Nanovation Common Shares. The
proposed legislation will also require technical analysis in order to determine its potential impact on Stamford.
Accordingly, management of Stamford intends to introduce a motion to adjourn the Stamford shareholders meeting. Stamford will continue to consider these
issues in detail and will make an announcement as to the timing of a further mailing to shareholders as soon as practicable. |
