The separation itself — a holding company above the operating company

This week’s mechanic is not exotic and it is not a function of scale. Trøim owns Borr through a Bermudian company owned by a trust; Slim owns Talos through a Mexican S.A. de C.V.; the individual is never on the ticket. The Ontario equivalent is ordinary: the operating company held by a holdco, with the growth shares issued to a discretionary family trust.

What it actually buys, in this order: creditor separation between the trading risk and the accumulated cash; movement of retained earnings up to the holdco on a tax-deferred basis using the inter-corporate dividend deduction in section 112; and purification of the operating company so its shares can satisfy the asset tests for QSBC status and the lifetime capital gains exemption. The last one is the expensive one to get wrong, because it is tested over the 24 months before a sale, not on the day of it.

First step this week. Get a current, documented fair market valuation of your shares. Everything below is priced off that number, the number only goes up, and it is the one input you cannot backdate.