Regulatory approval condition

Some purchases cannot lawfully close until a regulator has acted. BDC lists regulatory approvals, such as Competition Law approvals, among the things the parties may have to obtain after signing the purchase agreement and before closing. A regulatory approval condition writes that requirement into the agreement.

Federal examples

Under the Competition Act, section 123(1), a proposed transaction that must be notified shall not be completed before the end of the stated waiting period; section 123(2) sets an exception. Whether a deal must be notified depends on the Act’s tests. Under the Investment Canada Act, section 16(1), a non-Canadian shall not implement a reviewable investment unless it has been reviewed and the Minister is satisfied, or deemed satisfied, that it is likely to be of net benefit to Canada, subject to the exceptions in section 16(2).

Provincial examples and what to ask

Some licences are issued by provinces. In Nova Scotia, for example, the provincial government says businesses, societies and non-profits that buy a licensed establishment need to apply for approval to transfer the existing liquor licence, and that club liquor licences are not transferable. Other provinces run their own regimes.

• Which federal and provincial approvals apply to this business and this buyer
• Who files, and who pays for and controls the process
• The outside date, and what happens if an approval is refused or delayed

For one federal test, see whether buying a partnership interest triggers Competition Act notification.