Canada Ltd. has owned a motel in the US for years. The motel is managed by an independently owned US hotel management company pursuant to a management contract. Pursuant to the contract, the hotel management company assumes liability for the risk of loss thus insulating Canada Ltd. from liability. Canada Ltd. desires to take over the management of the motel itself but is concerned that Canada Ltd’s substantial investments in Canada and the US will be put at risk should a liability producing event occur.

The principals of Canada Ltd. form a new Canadian holding company. The Canadian holding company forms a US management company. The US management company is a wholly owned subsidiary of the Canadian holding company. The US management company then contracts with Canada Ltd. to manage the motel and assumes liability for any risk of loss. Liability runs from the US management company to the Canadian holding company and not to Canada Ltd.

In the interests of security and confidentiality the entity names contained in the these
cross border transactions are fictitious.