Canadian Compensation Arrangements – When Do I Need U.S. Counsel?
Imagine a Canadian company adopts a deferred share unit plan (DSU Plan) for its directors. At the time the plan is adopted, the company does not have the plan reviewed by U.S. counsel, because none of their directors reside in the U.S. It is not until several years later that the company learns that one of its directors, despite living in Canada, has dual citizenship with the U.S. Because the typical form of Canadian DSU Plan will not comply with U.S. tax laws governing deferred compensation, particularly U.S. Internal Revenue Code Section 409A (Section 409A), the company has quite a mess on its hands. You can read our prior articles on common payment timing issues...
