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Immigration Issues in M&A Transactions

Navigating the intricate legal environment of a merger, acquisition, takeover or other corporate restructuring can be difficult enough without the added impact of immigration issues on such a transaction. Meeting tight deadlines and dealing with complex financial matters in these situations often results in immigration issues becoming a second thought for those involved. However, given the implications of failing to consider these issues as an essential component of the transaction (which can range anywhere from illegally employing workers, losing business contracts or spending thousands of dollars to defend against lawsuits), and the time it may take to address flagged issues, delay identifying and addressing immigration issues may create real problems. Considering these issues upfront could save a company both time and money in the long run.

Before a decision is made to acquire a company, an organization may want to send its representatives to Canada to assess the viability of the potential transaction, conduct its due diligence, or evaluate any potential risk. These pre-acquisition activities are permitted and will not require a Canadian visa or work permit if the representatives are not seen to be directly entering the Canadian labour market. In order to avoid this, it is important that those visiting continue to be employed and paid by their home company outside of Canada and that the purpose of their trip is to carry out “international business activities”. If the representative performs work for the Canadian company, he or she would require a work permit. Note that business visitors from certain countries (i.e. India, China, Russia) that are not U.S. citizens may need to obtain a visitor visa or an electronic travel authorization (eTA) prior to their entry into Canada.

Once a merger or acquisition is completed, the acquiring company may wish to retain some or all of the vendor’s employees. Offers of employment should factor in an employee’s immigration status, such as whether they are subject to a work permit, visa or other work restriction. Employees holding employer-specific work permits will need to consider the ownership structure of the new company, for instance, whether it is a successor in interest employer or the same employer. If the employee requires a work permit, he or she may need to contact the appropriate authority to amend the terms of the permit to reflect the new company. In addition, the employer may need to obtain a Labour Market Impact Assessment (LMIA) from Service Canada showing that there is a need for the foreign worker to fill the job. If the new company assumes the previous company’s assets and liabilities (including those with respect to hiring temporary foreign workers), a new LMIA is not required. It should be made clear to potential workers that any offer of employment is conditional on the parties obtaining the proper documentation.

Consulting early with immigration experts is increasingly more important.  When immigration issues are flagged promptly, timely steps can usually be taken to avoid potentially serious consequences.

Naseem Malik is Counsel to Stringer LLP in Toronto. His practice focuses exclusively in the area of business immigration.  

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