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Qualifying Transaction

What is 'Qualifying Transaction'

A type of transaction that occurs when a company issues public stock in Canada. A qualifying transaction occurs when a qualified Capital Pool Company (CPC) purchases all of the outstanding shares of a privately-owned company from the current shareholders. The private company then becomes a fully-owned subsidiary of the CPC.

Explaining 'Qualifying Transaction'

Because the capital pool company will, by nature, have no business of its own, whatever line of trade that the private company engages in becomes the business of the CPC. Qualifying transactions usually formally begin when the shareholders and the CPC create a Letter of Intent (LOI) outlining the terms of the agreement. Usually, the CPC must include a plan for financing the transaction in every LOI.


Further Reading


The economics of Islamic finance and securitization
jsf.pm-research.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Reduction of financial instrument volatilityReduction of financial instrument volatility
patents.google.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Reporting on financial derivatives–A Law and Economics perspectiveReporting on financial derivatives–A Law and Economics perspective
link.springer.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Bypassing the financial growth cycle: Evidence from capital pool companiesBypassing the financial growth cycle: Evidence from capital pool companies
www.sciencedirect.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Finance in the Courtroom: Appraising Its Growing PainsFinance in the Courtroom: Appraising Its Growing Pains
papers.ssrn.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Money in the bank: Transaction costs and the economic organization of marriageMoney in the bank: Transaction costs and the economic organization of marriage
www.jstor.org [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Entrepreneurial Finance and Economic Growth: A Canadian OverviewEntrepreneurial Finance and Economic Growth: A Canadian Overview
papers.ssrn.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Reduction of financial instrument volatilityReduction of financial instrument volatility
patents.google.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …

Financial derivatives in corporate tax avoidance: A conceptual perspectiveFinancial derivatives in corporate tax avoidance: A conceptual perspective
meridian.allenpress.com [PDF]
… Since lending transactions under Islamic law are based on the concept of asset backing and specific credit participation in identified business risk, it … The Economics of Islamic … the costs from the use of the asset have to be defrayed by the lessee.12,13 If the ijarah transaction is a …



Q&A About Qualifying Transaction


What does Qualifying Transaction mean?

A qualifying transaction occurs when a qualified Capital Pool Company purchases all of the outstanding shares of a privately-owned company from the current shareholders.

Who creates an LOI for this type of transaction?

The shareholders and CPC create an LOI to outline terms.

What is a Qualifying Transaction?

A qualifying transaction occurs when a qualified Capital Pool Company purchases all of the outstanding shares of a privately-owned company from the current shareholders.

How does this type of transaction begin?

The process begins with an LOI outlining the terms of agreement between both parties.

Why are private companies sold through these types transactions instead of being listed on stock exchanges ?

Private companies are often sold through these types transactions because it allows them to avoid paying fees associated with listing on stock exchanges .

How many times can you sell your shares after you have been bought out by one these types transactions ?

You cannot sell your shares more than once after being bought out by one these types transactions .

Who usually finances this type of transaction?

The CPC usually finances transactions like these.

What must be included in every LOI for this type of transaction?

Usually, financing plan is included in every LOI.

Why might you want to use a Financial Transactions tax (FTT) instead of another type of tax like VAT or Sales Tax (which have been used in many countries)?

There are several reasons why you might want to use an FTT instead of other types of taxes including sales taxes and property taxes; however there are two main reasons why people suggest using FTTs over other types of

What does the term "levy" mean in this context?

The term levy means to charge or collect.

Where do most private companies get their funding from before they become part of a Qualifying Transaction ?

Private companies tend to get funding from banks or venture capitalists before becoming part of one these types transactions.