Buying a travel agency in Ontario: what carries over and what you must file with TICO

People searching for how to buy a travel agency, or how to purchase a travel agency licence, are asking one thing: what comes with the business? In Ontario the answer starts with the Travel Industry Act, 2002. Section 8(3) of the Travel Industry Act, 2002 says a registration is not transferable. That one sentence shapes how a purchase is built, because a buyer cannot simply be handed the seller’s registration. What the buyer must file depends on whether it buys assets or buys shares. This guide covers Ontario only; if the agency sells travel in another province, check the rules there.

An asset purchase does not bring the registration

If you buy the agency’s assets, such as its client list, website, equipment and name, you are not buying its registration, because section 8(3) of the Travel Industry Act, 2002 says a registration is not transferable. Section 4(1) of that Act says no person may act, or hold itself out as available to act, as a travel agent or travel wholesaler unless registered as one under the Act, and section 43(1) lets the Lieutenant Governor in Council exempt persons or classes of persons by regulation. The Travel Industry Council of Ontario (TICO), which its Registration Overview / Requirements page says is mandated by the Ontario government to administer the Act, says on that page that selling travel services in and from Ontario without TICO registration is a contravention of the Travel Industry Act, 2002, and that this also applies to anyone whose application for registration is pending approval. The same page says that until registration is granted, a business is not permitted to operate, sell or promote travel services in any form. Ask TICO how and when your own business must apply, and get the answer in writing before you pay a deposit or sign a purchase agreement.

A share purchase keeps the registrant, but triggers filings

Buying the shares of a registered corporation leaves the same corporation as the registrant, so no registration is moved, although TICO may require a new application if control changes (see below). The filings are then about who owns and runs the corporation. Under section 5(1) of the Travel Industry Act, 2002, a change in the officers or directors of a corporation registered as a travel agent or travel wholesaler may be made only with the consent of the registrar. If the new owner plans to replace the directors at closing, that consent is part of the timetable. TICO’s Making Changes to Registration page repeats that changes to a corporation’s officers or directors require the registrar’s consent.

The 30-day share-transfer notice

Section 15(1) of the Travel Industry Act, 2002 adds a separate duty: in addition to the disclosure required under section 9, a registrant that is a corporation must notify the registrar in writing within 30 days after the issue or transfer of any equity shares, if the issue or transfer results in a person, or persons associated with each other, acquiring or accumulating beneficial ownership or control of the share portion the section sets, or in an increase for someone who already held at least that portion. Section 15(2) of the Act says that, despite subsection (1), if the corporation becomes aware of such a transfer only after it has taken place, it must notify the registrar in writing within 30 days after knowledge of the transfer comes to the attention of its officers or directors. Read the clauses with your lawyer: section 15(3) of the Act counts each share that carries more than one vote as the number of votes it carries.

When TICO says a new application is needed

A notice is not always enough. TICO’s Making Changes to Registration page lists a change in shareholder structure that results in a change in the controlling interest, the death of a majority shareholder that changes control, a change in partners in a partnership, an amalgamation, merger or other change that forms a new business entity, and a change in business category, such as a sole proprietorship becoming a corporation, under changes requiring a new application for registration, and says all registration requirements must be met. So a deal that moves control of the corporation may need an application, not only a notice. Ask TICO in writing, before signing, which side of that line your structure falls on.

Other changes, closing and the compensation fund

TICO’s Making Changes to Registration page also sets notice deadlines for other changes, such as the business name, address, financial institution and designated supervisor, so build those into the closing plan. If the seller knows in advance that it will stop selling travel services, that TICO page says written notice must be submitted as soon as possible and at least 10 days before; if it does not know in advance, it must notify TICO as soon as possible after becoming aware. A registered business must also renew its registration every year, according to TICO’s Starting Your Business page, and renewal fees are calculated on its reported Ontario sales from the previous fiscal year. That page also says that completing its Certification Program and exam is a requirement to sell travel services on behalf of an Ontario registered travel retailer, so ask which of the agency’s staff have done so and who would be left selling after closing. Section 41(1) of the Travel Industry Act, 2002 continues the Travel Industry Compensation Fund, and TICO’s Starting Your Business page describes the fund as consumer protection and points registrants to the requirements for paying assessments into it. Ask the seller how client deposits and open bookings will be handled at changeover.

A checklist of what to confirm

• Whether the deal is for assets or shares, and what each means for the registration under the Travel Industry Act, 2002.
• Whether any change of officers or directors at closing has the registrar’s consent under section 5(1) of the Travel Industry Act, 2002 in hand.
• Whether the share transfer needs the written notice within 30 days under section 15 of the Travel Industry Act, 2002, or whether TICO treats it as a change in controlling interest needing a new application.
• Which other TICO change notices fall due around closing, and who will file them.
• How supplier agreements, client deposits and open bookings will carry over; ask each party directly, because this guide does not cover them.

For the definition and what a buyer asks about registration, see the glossary entry on travel agency registration.