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Manner and Timing of Election and Manner of Termination of Election

16.91. The working out of detailed provisions as to the manner and timing of an election and the manner of termination of an election will be assisted by drawing on United States experience. If, as suggested in paragraph 16.93, both profits and losses are allocated to shareholders by reference to their daily holdings of shares throughout the year, it will be necessary to set the time for making an election early in the year of income and to deem a shareholder who signs an election to have been a shareholder from the beginning of the year. A person who acquires shares thereafter should be deemed to have consented to the election unless he gives the Commissioner notice of revocation. Subject to this, the unanimous consent of all shareholders should be


  ― 241 ―
required. All shareholders who have consented would need to join in any revocation. A new shareholder who has not consented might, however, bring about a revocation by giving notice to the Commissioner.

16.92. Unanimity of consent, in the view of the Committee, is necessary to prevent prejudice to a minority shareholder who might otherwise be forced to accept liability to tax on profits he has no immediate prospect of receiving.

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