What regulatory approvals can a business sale need before it can close?

No single approval applies to every business sale. What is needed depends on what the business does, where it operates and who the buyer is. For a seller, the practical point is that many of these cannot be finished by the seller alone, and some run on a regulator’s timetable rather than the lawyers’, so they shape the closing date.

Licences and permits that stay behind

Vancouver Coastal Health states that its annual food service permit is not transferable to a new owner, and the City of Richmond Hill says its business licences are non-transferable. In both cases the buyer applies in its own name, so the seller cannot hand the permit over at closing however willing everyone is.

Zoning and the premises

Edmonton states that zoning approval is required to obtain a valid business licence, and applies it to a new business, a move, or a change of activities in an existing location. It encourages owners to obtain approval before signing a lease, or to sign a conditional lease. A buyer who plans to change what the business does could therefore face this step.

Competition and foreign-investment filings

The Competition Bureau explains that some mergers must be notified before closing, depending on financial thresholds in the Competition Act, and that the Commissioner may review any merger regardless of size. Separately, a non-Canadian buyer that acquires control of a Canadian business must submit a notification or an application for review under the Investment Canada Act unless an exemption applies.

Sector and ownership limits

Some rules limit who may own particular assets. Manitoba’s Farm Lands Ownership Act limits foreign interest in Manitoba farm land, and regulated professions set their own ownership and licensing rules, which the regulatory college answer explains. Ask your lawyer early which of these touch your business and whether the agreement should make them conditions of closing.