Corporate Conversion

On October 31, 2006, the Canadian Federal Government proposed a change to the way income trusts are taxed. The proposal would cause distributions to be taxed at the trust level where currently they are taxed only at the unitholder level.

On March 19, 2007, the Government of Canada tabled in Parliament Bill C-52 to implement the October 31, 2006 Proposal discussed above. Bill C-52 received Royal Assent as of June 22, 2007 and appears to be generally consistent with details included in the October 31, 2006 announcement.

On May 6, 2010, CML HealthCare Income Fund (the "Fund") announced its intention to convert (the "Conversion") from an income trust structure to a corporation with the new name CML HealthCare Inc. (the "Company") effective January 1, 2011. The post-conversion dividend is anticipated to be $0.0629 per share on a monthly basis, or $0.7548 per share on an annual basis. This reflects a 29.5% reduction from the annual distribution of $1.07 per unit declared by the Fund. For investors holding CML outside of a registered account, there should be no material change on an after-tax basis as the majority of the post-conversion dividend will be eligible for the dividend tax credit.

The Conversion was approved by unitholders of the Fund at a special meeting of unitholders held on December 1, 2010 by a vote of 99.8% in favour, and the final court approval was received on December 6, 2010.  Pursuant to the Conversion, each CML Fund unit was exchanged for a common share of the Company on a one-for-one basis. The Conversion was completed on a tax-deferred, rollover basis for Canadian resident unitholders and with the completion of the Arrangement, the Company will now directly or indirectly own and operate the existing businesses of the Fund and its subsidiaries.  Effective January 1, 2011, CML HealthCare Inc. began trading on the Toronto Stock Exchange under the ticker symbol CLC. 

 For form 8937, please click here