Generally, a CFC is a "foreign affiliate" that is legally controlled by the Canadian shareholder, or that would be controlled by the shareholder if the shareholder owned all of the shares of the foreign corporation that are owned by the taxpayer, persons that do not deal at arm's length with the taxpayer, and any other four Canadian residents. A "foreign affiliate" of a Canadian taxpayer is a non-resident corporation, where at least 1 percent of the shares of any class are owned, directly or indirectly, by the Canadian shareholder and at least 10 percent of the shares of any class are owned, directly or indirectly, by the Canadian shareholder together with related persons.