Immigration Issues in M&A Transactions

Given the complexities of a typical business acquisition, it is frequently the case that immigration issues slip well down the priority list for such a transaction.  From dealing with entry into Canada for the purpose of conducting due diligence, to deciding whose responsibility it is to employ foreign workers post transaction, immigration issues should be on any foreign acquiror’s checklist.

In a situation where a foreign-based company is purchasing a Canadian company and needs to have its personnel enter Canada to conduct due diligence, in many instances representatives of the purchaser can enter as business visitors, as long as they engage in activities which are deemed to be international in nature, remain on the payroll of the foreign based company, and are not seen to be entering into the Canadian labour market.  Business visitors do not require Canadian work permits to engage in such business activities on Canadian soil.

If these employees are not U.S. citizens or green card holders they may require a special temporary resident visa to enter Canada if they are nationals of certain designated countries (examples: Brazil, China, Russia).  Temporary resident visas cannot be applied for at the border or from within Canada and must be secured prior to travel through a Canadian Consulate, high Commission or Embassy outside Canada.

In some asset purchase transactions, where offers of employment are made to employees of the vendor, care needs to be taken with respect to any workers of the target who are on work permits as work permits are generally employer specific.  In most instances, before a purchaser can employ such a foreign worker, the employee needs to apply to Canada Immigration to vary the terms of his or her admission to Canada to be able to work for the purchaser after closing.  If that is the case, a new work permit needs to be issued showing the purchaser as the employer of the employee.  In some cases, this will also require the purchaser to make application to Service Canada (formerly Human Resources Skills Development Canada) for a Labour Market Opinion to be able to employ the foreign worker.  As a result, any offer of employment made to the foreign worker by the purchaser should be made conditional on the foreign worker applying for and obtaining a new work permit as described above.

Work permits are also usually required when the purchaser needs to bring in specialized workers and senior executives post-acquisition to guide the newly acquired company until such time as the company can transition the Canadian office and finds suitable Canadian replacement employees.