Which third-party consents do I need to close a business sale?

There is no single list. The consents a seller needs follow the structure of the sale and the wording of each contract, licence and loan. Build the list early, because a counterparty with the right to say yes or no can shape the closing date. Where a contract is being passed to a buyer, how contracts and leases transfer in an asset purchase explains the mechanics.

The landlord

Read the lease for a clause against assigning or subletting without consent. In Ontario, the Commercial Tenancies Act s.23(1) deems a covenant against assigning without licence or consent to be subject to a proviso that consent is not to be unreasonably withheld, unless the lease contains an express provision to the contrary. Under s.23(2), if the landlord refuses or neglects to give consent, the tenant, assignee or sub-tenant can apply to the Superior Court of Justice for an order on whether it is unreasonably withheld. Other provinces have their own rules.

Competition and foreign-investment filings

A large deal can require notice to the Commissioner of Competition. Under Competition Act s.114(1), subject to the rest of that Part, parties to a proposed transaction that meets the size tests in ss.109 and 110 must notify the Commissioner before completing it. Section 123(1) bars completion until 30 days after the Commissioner receives the required information, or, if the Commissioner asks for more under s.114(2) within that time, 30 days after receiving it, subject to s.123(2). If the buyer is a non-Canadian, check the Investment Canada Act: where an investment is subject to notification, s.12 requires the non-Canadian to give notice before implementation or within thirty days after, and a reviewable investment cannot be implemented unless reviewed and the Minister is satisfied or deemed satisfied that it is likely to be of net benefit to Canada (s.16(1)).

Contracts, licences and personal information

Check each customer, supplier and equipment contract, each licence and each loan for assignment and change-of-control wording, and ask the regulator behind any licence whether it transfers. Customer consent is a different matter: PIPEDA s.7.2(1) allows parties to a prospective business transaction to use and disclose personal information without the individual’s knowledge or consent if its conditions are met, including a protective agreement and necessity for the deal.