Comprehensive transactional legal counsel for business acquisitions, mergers, and sales across British Columbia under the Business Corporations Act.
Buying or selling a business in British Columbia proceeds either as an asset purchase or a share purchase under the BC Business Corporations Act. The transaction involves letters of intent, lien searches under the Personal Property Security Act, lease assignment approvals, tax elections under Section 22 and 167, and formal closing documentation.
Negotiation of core deal terms, exclusivity periods, deposit escrow conditions, and asset versus share purchase classification.
Examining corporate minute books, financial records, litigation history, and registered security interests under the BC Personal Property Registry.
Navigating landlord covenants, assignment requirements, personal indemnities, and landlord consent agreements.
Drafting representations, warranties, indemnities, non-compete covenants, inventory adjustments, and statutory tax elections.
Comparative Legal Analysis & Structuring
| Key Dimension | Asset Purchase (APA) | Share Purchase (SPA) |
|---|---|---|
| Liabilities Assumed | Buyer selects specific assets; pre-existing debts and historic liabilities remain with the seller entity. | Buyer acquires corporate shares, automatically inheriting all historical corporate liabilities, debts, and audits. |
| Tax Treatment for Parties | Buyer steps up asset cost bases for future depreciation; seller may incur recapture and income tax. | Qualifying individual sellers may claim the Lifetime Capital Gains Exemption (LCGE); buyer inherits historical basis. |
| Third-Party & Lease Consents | Requires explicit written assignment agreements from landlords, suppliers, and individual employment re-offers. | Contracts remain with the company; however, lease "change of control" clauses frequently require landlord approval. |
| Statutory Registry Filings | PPSA lien discharges, Bulk Sales provisions, and joint GST/PST tax election filings (ss. 22 & 167). | Director resolutions, share ledger entries, share certificate transfers, and BC Corporate Registry updates. |
In an asset purchase, the buyer acquires specified operating assets and equipment while leaving pre-closing debts and corporate liabilities with the seller company. In a share purchase, the buyer acquires shares of the corporation itself, assuming ownership of all corporate history, contracts, assets, and liabilities. Tax implications differ significantly between the structures.
Under the Personal Property Security Act (PPSA) of British Columbia, creditors register security interests against equipment, inventory, and accounts. A formal PPSA search reveals registered liens, bank chattel mortgages, and leasing claims. Unreleased liens remain attached to the purchased assets, exposing an unwary purchaser to repossession risks by third-party secured lenders.
No. Standard BC commercial leases contain covenants prohibiting assignment or transfer without prior written landlord consent. The purchaser must submit financial records and references for landlord approval. In share transactions, "change of corporate control" clauses in modern commercial leases also trigger landlord consent requirements prior to transaction completion.
Section 22 allows buyer and seller to jointly elect on the tax treatment of accounts receivable, enabling bad debt deductions for the purchaser. Section 167 allows the parties to execute a joint election exempting the transfer of all or substantially all operating assets from Goods and Services Tax (GST), avoiding upfront cash tax payments.