The family corporation is no longer of any great practical significance, because the special tax provisions relating to family corporations were repealed some time ago. The personal corporation is a type of corporation defined in the Income War Tax Act. I have not the section here, but broadly speaking it is a company with just a few shareholders which is controlled by an individual or by members of his family, and I think it is 75 per cent or 85 per cent of its revenue must be derived from interest or dividends on securities and the like. The income of the company is taxed in the hands of the shareholder in proportion to the number of shares held. This so-called private company, as used in this section, applies simply to the type of company which was dealt with by the Ives commission in its report, and colloquially it might be described as a company with closely held shares. The requirements in the suggested amendment are that the company should not have more than seventy-five shareholders. That definition is a modification of the provisions of the Companies Act, which states what will constitute a private company for the purposes of the Companies 83166-253J
Act and thereby relieve the company from obligation of filing a prospectus or a statement in a prospectus.
I explained on introducing the resolutions on which these sections are based that in a good many cases, as a result of deaths and distribution among heirs, there are companies which are private companies within the intent of this legislation which have sold more than fifty shares, so we decided to extend it to seventy-five. There is nothing sacramental about the rule of fifty, except it happens to be the number which is set out in the Companies Act. That is a pretty general statement as to what constitutes a private company. There is no special legal significance to the term "private company" except under the Dominion Companies Act and except with respect to this particular legislation.