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Canadian Holdings Limited (TCH), respectively, using the proceeds
of the offering. The remaining 17-percent interest in CBA was to
remain publicly held. Metals owned directly and indirectly a 48-
percent interest in BA.
It was intended that the funds were to be raised abroad in a
manner not adversely affecting the U.S. balance of payments in
compliance with a program initiated by the U.S. government on
January 1, 1968, and set forth in Direct Foreign Investment
Regulations. See 33 Fed. Reg. 49 (Jan. 3, 1968). The plan also
contemplated that the newly formed subsidiary would satisfy the
80-percent income from non-U.S. sources requirement of those
regulations in order to exempt the interest on the debentures
from the U.S. withholding tax on nonresident aliens or foreign
corporations and provide estate tax benefits to such aliens. See
Committee on Taxation of International Finance and Investment of
New York State Bar Association, Tax Section, "Report on
International Finance Subsidiaries," 28 Tax L. Rev. 443, 444
(1973).
The memorandum presented to the Board contemplated that
Metals would benefit from the outlined plan in the following
manner:
1. BA will increase its capacity for the production
of primary aluminum and alumina in the United
Kingdom.
2. Reynolds Metals will increase its equity ownership
in CBA from 31% to 83%.
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