Share And Asset Purchase Agreement Template for Canada

A Share And Asset Purchase Agreement represents one of the most complex transaction structures in Canadian commercial law, combining elements of both share acquisitions and asset purchases into a single comprehensive document. You'll encounter this type of agreement when business transactions require acquiring both corporate ownership and specific assets that may be held by related entities or individuals.

When do you need this document?

You need a Share And Asset Purchase Agreement when acquiring a business that involves multiple components requiring different legal treatment. This typically occurs during corporate restructuring where you're purchasing shares in a target company while simultaneously acquiring assets held by the shareholders personally or through related entities. You'll also use this agreement when acquiring a business where certain key assets need to be carved out separately, such as intellectual property, real estate, or specialized equipment that's owned outside the corporate structure. Additionally, this document is essential when the seller wants to retain certain assets while transferring the operating business, or when regulatory requirements necessitate separate treatment of shares versus assets.

Key legal considerations

You must carefully allocate the purchase price between shares and assets, as this affects tax treatment under the Income Tax Act for both parties. The agreement requires comprehensive representations and warranties covering both corporate matters and asset conditions, with separate indemnification provisions for each component. You'll need to address different closing conditions for shares versus assets, including corporate approvals, securities law compliance, and asset transfer requirements. Due diligence obligations extend to both corporate records and asset documentation, requiring verification of clear title, liens, and encumbrances. The document must include specific provisions for purchase price adjustments, escrow arrangements, and post-closing covenants that account for the dual nature of the transaction.

Legal requirements in Canada

Your agreement must comply with the Canada Business Corporations Act for share transfer provisions, including director and shareholder approvals where required. Provincial securities legislation governs share transfers, particularly regarding disclosure requirements and restrictions on private placements. You must ensure compliance with the Competition Act if the transaction meets merger notification thresholds, requiring pre-closing competition review. The Income Tax Act mandates specific tax elections and filings for both share and asset components, with different treatment for capital gains versus business income. Provincial Personal Property Security Act requirements apply to asset transfers, requiring searches and appropriate registrations. Where applicable, provincial Bulk Sales Act provisions protect creditors and may require specific notices and compliance procedures for asset portions of the transaction.