Civil Law

In a share purchase, the buyer acquires the corporate entity itself, including all assets and liabilities (known and unknown). This provides business continuity but creates greater risk exposure. Asset purchases allow buyers to select specific assets and explicitly assume only identified liabilities, providing better protection but potentially creating transfer complications with contracts, licenses, and tax implications. The optimal structure depends on risk tolerance, tax considerations, and specific business circumstances.

The timeline varies significantly based on transaction complexity, but most acquisitions require 3-6 months from letter of intent to closing. Small, straightforward transactions might complete in 60-90 days, while complex deals involving regulatory approvals or international components can extend beyond a year. Key timeline factors include due diligence scope, financing arrangements, third-party consents, and regulatory requirements.

Canadian corporations must file annual returns, maintain a registered office, keep corporate records updated, hold annual shareholder meetings (or signed resolutions in lieu), file corporate tax returns, and maintain director/officer registries. Additionally, corporations must update government filings when changing directors, registered office, or articles of incorporation. Industry-specific regulatory compliance may add additional ongoing requirements depending on your business activities.

Employment transitions depend on transaction structure. In share purchases, employment typically continues uninterrupted as the employer entity remains unchanged. In asset purchases, employees must technically be terminated by the seller and rehired by the buyer, raising potential liability for severance obligations. Strategic approaches include conditional offers to selected employees, negotiated liability allocations between buyer and seller, and careful communication planning to maintain workforce stability throughout the transition.