Look Communications Makes Payment of Previously Announced Return of Capital
14 March 2012 - 8:30AM
PR Newswire (Canada)
TORONTO, March 13, 2012 /CNW/ - Look Communications Inc. ("Look" or
the "Company") (NEX: LOK.H; LOK.K) today announced that it has paid
the previously announced distribution of an aggregate amount of
$6,985,076.20 to the holders of its multiple voting shares and
subordinate voting shares, on a pro rata basis, as a return of
capital. Based on the number of multiple voting shares and
subordinate voting shares outstanding on the date of this news
release, shareholders will receive $0.05 for each multiple voting
share and subordinate voting share held. Cheques have been
mailed to registered holders of multiple voting shares and
subordinate voting shares. On February 23, 2012, the holders of
multiple voting shares and subordinate voting shares approved
special resolutions authorizing the Company to reduce the stated
capital attributable to the multiple voting shares and the
subordinate voting shares for the purpose of a distribution to
shareholders in an amount up to the total stated capital of the
multiple voting shares and subordinate voting shares. Tax
Considerations The following describes the principal Canadian
federal income tax considerations under the Income Tax Act (Canada)
(the "Tax Act") generally applicable to Shareholders who, for the
purposes of the Tax Act, and at all relevant times, hold their
multiple voting shares and subordinate voting shares (collectively,
"Shares") as capital property and deal at arm's length with, and
are not affiliated with, the Company. Generally speaking,
Shares will be considered to be capital property of a Shareholder
provided the shareholder does not hold the Shares in the course of
carrying on a business of trading or dealing in securities and has
not acquired them in one or more transactions considered to be an
adventure or concern in the nature of trade. Certain
shareholders who might not otherwise be considered to hold Shares
as capital property may, in certain circumstances, be entitled to
have them treated as capital property by making the election
permitted by subsection 39(4) of the Tax Act. This summary is not
applicable to a shareholder: (i) that is a "financial institution"
for the purposes of the mark-to-market rules; (ii) an interest in
which would be a "tax shelter investment" (iii) that is a
"specified financial institution" or (iv) whose "functional
currency" is the currency of a country other than Canada, all as
defined in the Tax Act. Such shareholders should consult
their own tax advisors with respect to the income tax
considerations applicable to their own particular circumstances.
This summary is based upon the provisions of the Tax Act in force
as of the date hereof and the current published administrative
policies and procedures of the Canada Revenue Agency (the
"CRA"). Except for specifically proposed amendments to the
Tax Act that have been publicly announced by the Minister of
Finance (Canada) prior to the date hereof, this summary does not
take into account or anticipate changes in the income tax law,
whether by legislative, regulatory or judicial action, nor any
changes in the administrative or assessing practices of the
CRA. This summary is not exhaustive of all the Canadian
federal income tax considerations nor does it take into account or
anticipate any provincial, territorial or foreign tax
considerations. The Company expects that the "paid-up capital"
("PUC") per share of each of the multiple voting shares and the
subordinated voting shares will be substantially in excess of the
amount of the distribution per Share. Moreover, while the
matter is not free from doubt, the Company is of the view that the
distribution will be made "on the discontinuance, winding-up or
reorganization" of Look's business. No advance income tax
ruling has been sought to confirm this conclusion, and accordingly,
it is possible that the CRA may take a contrary view.
Resident shareholders should consult their own advisors to
understand the tax consequences of the distribution if it is not
made "on the discontinuance, winding-up or reorganization" of
Look's business, or to the extent that the amount of the
distribution exceeds available PUC as those consequences will be
different from those described below. Resident Shareholders The
following portion of this summary generally is applicable to
shareholders who, at all relevant times and for the purposes of the
Tax Act, are or are deemed to be residents of Canada (each, a
"Resident Shareholder"). The Company is of the view that the amount
of the distribution received by a Resident Shareholder will: -- be
a tax-free return of capital, and will not be deemed to be a
dividend, paid to the Resident Shareholder; and -- reduce the
adjusted cost base of its multiple voting shares and subordinated
voting shares, respectively, by the amount of the distribution so
received in respect of such Shares. In the event that the reduction
to a Resident Shareholder's adjusted cost base causes the adjusted
cost base to become negative, such negative amount will be deemed
to be a capital gain realized by the Resident Shareholder in the
taxation year in which the distribution is received.
Generally, one-half of any capital gain (a "taxable capital gain")
realized by a Resident Shareholder will be included in the Resident
Shareholder's income under the Tax Act for the year in which it is
recognized. Taxable capital gains realized by a Resident
Shareholder who is an individual may give rise to minimum tax
depending on such Resident Shareholder's circumstances. A
Resident Shareholder that throughout the relevant year is a
"Canadian-controlled private corporation" as defined in the Tax Act
may be liable to pay a refundable tax of 6⅔% on certain investment
income, including taxable capital gains. Non-Resident Shareholders
The following portion of this summary generally is applicable to a
shareholder who at all relevant times, for the purposes of the Tax
Act and any applicable income tax treaty, (1) is not resident, and
is not deemed to be resident, in Canada, (2) does not use or hold,
and is not deemed to use or hold, the Shares in connection with
carrying on a business in Canada, and (3) is not an insurer who
carries on an insurance business in Canada and elsewhere (each, a
"Non-Resident Shareholder"). The Company is of the view that the
amount of the distribution received by a Non-Resident Shareholder
will be a tax-free return of capital, and will not be deemed to be
a dividend. Accordingly, a Non-Resident Shareholder
will not be subject to Canadian tax on the distribution. The
distribution received by a Non-Resident Shareholder will reduce the
adjusted cost base of its multiple voting shares and subordinated
voting shares, respectively, by the amount of the Distribution so
received in respect of such Shares. In the event that the
reduction to a Non-Resident Shareholder's adjusted cost base causes
the adjusted cost base to become negative, such negative amount
will be deemed to be a capital gain realized by the Non-Resident
Shareholder in the taxation year in which the distribution is
received. However, such capital gain will not be taxable
under the Tax Act so long as the Shares do not constitute "taxable
Canadian property" for purposes of the Tax Act. The Company
expects that the Shares will not constitute "taxable Canadian
property" at the time of the distribution. Non-Resident
Shareholders should consult their own Canadian tax advisors in this
regard. Forward-Looking Statements Certain statements contained in
this news release, including statements regarding the potential tax
consequences of the distribution and the timing of receipt of
payment by any particular shareholder, constitute forward-looking
information within the meaning of applicable Canadian securities
laws. The words "may", "attempt", "expect", "will" and similar
expressions are intended to identify forward-looking information.
Such information reflects Look's current views with respect to
future events and are subject to certain risks, uncertainties and
assumptions. Many factors could cause actual results that may be
expressed or implied by such forward-looking statements to vary
from those described herein should one or more of these risks or
uncertainties materialize, including, in addition to those
described elsewhere in this news release, the tax consequences of
the distribution to any particular shareholder and the CRA's
interpretation of the provisions of the Tax Act that apply to the
distribution. Except as required by law, Look does not assume
any obligation to update or revise the forward looking statements
contained in this news release to reflect actual events or new
circumstances. Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. Look Communications Inc. CONTACT: Grant
McCutcheon, Director, Look at (416) 613-8222
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