The Canadian market offers strategic growth opportunities for U.S. businesses especially in technology, manufacturing, and professional services. But cross-border mergers and acquisitions involve added legal complexities that require early planning and clear execution.
At Hadri Law, we regularly advise U.S. acquirers on structuring and closing Canadian transactions. Here’s what you need to know before making your move.
Jurisdiction Matters: Federal vs. Provincial Law
Unlike the U.S., corporate law in Canada is governed by either federal law (CBCA) or provincial statutes like Ontario’s OBCA. Understanding which regime governs your target will impact filing requirements, shareholder approvals, and post-closing formalities.
We help buyers assess corporate compliance, review minute books, and ensure that any required corporate changes align with the applicable law.
Foreign Investment Review
Some transactions may require approval or notification under the Investment Canada Act (ICA) if:
- The deal involves a non-Canadian acquirer, and
- The transaction value exceeds specific thresholds (updated annually)
Certain industries including transportation, telecommunications, and cultural businesses are subject to enhanced scrutiny under national security reviews.
Tip: Plan ahead. ICA reviews can delay closing unless properly managed from the outset.
Employment Law Differences
In Canada:
- At-will employment doesn’t exist.
- Employees are entitled to statutory notice or severance pay upon termination.
- Employee rights and entitlements often survive the transaction.
We help U.S. buyers:
- Conduct employment due diligence
- Review employee agreements and policies
- Structure appropriate retention plans or transitional arrangements
Privacy and Data Laws
Canadian businesses are subject to PIPEDA and provincial privacy laws that govern:
- How customer and employee data is collected, stored, and transferred
- Whether consent is required to transfer data to a new owner or across borders
Especially in share deals, buyers must review data-handling practices and determine whether additional consents or disclosures are required.
Tax and Structuring Considerations
Cross-border deals raise a number of tax questions:
- Will the buyer acquire assets or shares?
- What are the withholding tax implications?
- How will the transaction be treated under the Canada-U.S. Tax Treaty?
We collaborate with Canadian tax advisors to structure the deal in a way that minimizes liability and maximizes post-closing integration efficiency.
Currency and Financing Logistics
If the purchase price is in U.S. dollars but operations are in Canadian dollars, exchange rate fluctuations can impact valuation and working capital. Additionally, U.S. lenders may have to adjust financing models to comply with Canadian security registration rules (PPSA).
Hadri Law supports U.S. clients in preparing appropriate credit documents, coordinating with local counsel, and registering security interests across provinces.
How Hadri Law Supports U.S. Buyers
We offer full-scope legal support for cross-border deals, including:
- Canadian legal due diligence
- Share and asset purchase agreement drafting
- Employment and privacy law compliance
- Coordination with U.S. counsel and tax professionals
- Ongoing post-closing support for Canadian operations
Final Thoughts
Cross-border M&A transactions between the U.S. and Canada present exciting opportunities, but only if they’re structured with a clear understanding of Canadian legal nuances. Early legal guidance is key to reducing risk, managing timelines, and protecting your investment.
Have questions? Reach out to Hadri Law at 437‑397‑2374, email contact@hadrilaw.com, or book a no-cost consultation.