How do I buy a business in the Northwest Territories?

Buying a business in the Northwest Territories uses the national sequence of steps, with territorial law added at several points. This page covers the Northwest Territories only. It looks at the Employment Standards Act, the Workers’ Compensation Act and the Workers’ Safety and Compensation Commission, the Liquor Act, the Personal Property Security Act and the Corporate Registries. Some of the legislation texts below were read from Internet Archive copies of the Government of the Northwest Territories’ own pages, so confirm the current wording on the official site. The national buying guide covers the common steps.

Employees carry their service across

The Employment Standards Act says that, for the purposes of the Act, the employment of an employee with a business, undertaking or other activity is deemed to be continuous and uninterrupted when the business, undertaking or other activity or part of it is sold, leased, transferred or merged, or if it continues to operate under a receiver or receiver-manager. The Act says this for its own purposes, so it settles how service is counted under that Act and not every question about employment contracts. A buyer should therefore ask for each employee’s start date and current terms, and should plan on those dates carrying across to the new owner. Ask the seller to list any employees on leave, and ask your lawyer to review each written employment agreement before the offer is final.

The Commission can treat you as the former employer

The Workers’ Compensation Act gives the Commission a power over successors. It says the Commission may determine that an employer is the successor to a former employer and may treat the successor employer as the former employer for all purposes under the Act. The Act does not spell out here how the Commission will exercise that power, so ask the Workers’ Safety and Compensation Commission, before closing, how it would treat the purchase and whether the seller’s account is clear.

Registering with the WSCC

The Commission states that all employers who operate or establish a business in the Northwest Territories and/or Nunavut must register with it, unless they meet the Temporary Employer criteria set out in its policy. It also states that employers who fail to register must pay a penalty to the Commission. If you buy the business as a new entity, ask the Commission what registration you need and when, so that coverage is in place from your first day of operation.

Liquor licences

The Liquor Act lists who is not eligible for a licence. It says a licence may not be issued or transferred to or in respect of a minor, or an individual who is not a Canadian citizen or a permanent resident, among other cases the Act lists. Its list also includes an extra-territorial corporation, as the Act defines it, that is neither registered under the Business Corporations Act nor incorporated by or under an Act of Canada. So check the buyer’s own eligibility as well as the business’s. Section 15 requires a corporation that holds a licence to apply to the Board for approval of an issue or transfer of shares above a voting-control threshold that the section sets, so a share purchase of a licensed company is not automatically outside the licensing rules. Under section 14 the Board may, by order, approve or deny an application to transfer a licence, and an order on a manufacturing licence also needs the Commissioner’s written endorsement. If the business sells liquor, ask the Board how a transfer works and make the deal conditional on its approval.

Searching the registries

The Personal Property Security Act provides that a person may request a search by the name of a debtor, by the serial number of prescribed serial-numbered goods or by registration number, and the issue of a search result. The Government of the Northwest Territories’ Corporate Registries page says you can search online for business names and partnerships, territorial and extra-territorial corporations, non-profit societies, co-operative associations and other entities registered in the Northwest Territories using the Corporate Registries Online System. Ask your lawyer to run the searches that fit an asset or share purchase and to explain each result.

Federal tax and due diligence

Federal steps apply in every territory and province. The Canada Revenue Agency says you may need a new business number when you buy a business, and its page deals with payroll and GST/HST. BDC says due diligence gives crucial information on a target’s finances, prospects and legal issues. Fold the territorial points above into that same review and decide who will check each one. A simple order helps: confirm the seller’s legal form first, then the employees, the Commission’s account position, the liquor licence if there is one, and finally the registry searches that support your closing documents. Write the answers down and keep them with the purchase file.

• Which employees continue, and do their start dates carry across under the Employment Standards Act?
• What did the Workers’ Safety and Compensation Commission say about the seller’s account and about treating you as a successor?
• Are you registered with the Commission before you operate?
• If there is a liquor licence, will the territorial authority approve its transfer, or the share transfer of the licensee company?
• Which registry searches were run, and what did each show?