Starting June 30, 2025, B.C.’s new Commercial Liens Act makes it easier and more consistent for service providers to secure payment for their work. Whether you fix, store, move, tow, or salvage goods, the rules are getting simpler, fairer, and more flexible.

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Right now, different industries follow different lien laws, which can be confusing and costly. The new Act rolls everything into one clear set of rules and connects it with B.C.’s Personal Property Security Act (PPSA).

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What’s Changing:

• No Possession? No Problem: You can now enforce a lien even if you don’t have the goods in your possession.
• Automatic Liens: Your lien rights kick in as soon as you start the work, no matter where the goods are.
• More Goods Covered: Liens now apply to all types of goods, not just specific vehicles or equipment.
• Easier Sales Process: Selling goods to recover unpaid bills will follow the same, simpler process for everyone.
• Expanded Rights for Carriers: All transport providers can claim liens, and the amount secured can include agreed or market rates.

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Overall, the Act modernizes lien laws so service providers can get paid faster and owners know exactly what to expect.

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He’s making a list,

Checking it twice,

Gonna find out who’s naughty or nice.

- Santa Claus Is Coming To Town

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Just like Santa, governments make lists to find out who’s been naughty.

In British Columbia (BC), the Land Owner Transparency Registry (LOTR) and Corporate Transparency Registry (CTR) are (or will soon be) public databases listing the beneficial owners of land and corporate interests. These registries were created to help governments of all levels - and across borders - to counter money laundering and the financing of terrorism.

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Unlike Santa’s private list, the LOTR and CTR will be available to the public to search, at no or nominal cost. If your name and information are going to be included, the responsibility to notify you lies with another party – not the government.

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This means that your personal information could end up in a public registry without notice from the government – only from another party who may not be fully aware of their obligations.

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So, how do you know whether you are a beneficial owner of land or company shares, and whether your name could appear on these registries? Read on.

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Land Transparency

Since November 30, 2020, all transfers of land in BC have required buyers to file a transparency declaration. The declaration serves to compel disclosure of other “beneficial owners” [1] – the individuals who ultimately own or control the property.

Entities like bare trustees, nominees, and non-natural persons (such as corporations, trusts, and partnerships) typically have beneficial owners who must be disclosed.

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Joint Ownership of Land and Bare Trusts

Most landowners in BC begin as sole or joint owners. While it is common for couples to own property via joint tenancy, for other variations of joint ownership, the tax implications are tricky to navigate. For example, parents may add an adult child on the title of their home (or another property) to avoid probate fees on death. Even if that transfer is exempt from property transfer tax, for income tax purposes the parent is considered to have transferred half the property. This can impact the principal residence exemption, and often involves other income tax implications.[2]

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Bare trust arrangement have often been used to avoid property transfer tax, allowing beneficial ownership to transfer without changing title. For example, an individual may transfer beneficial ownership of land to a holding company as part of an estate freeze, but remain on title as bare trustee. In the case the parent adding a child on title – often exempt from property transfer tax – a bare trust can help to manage the income tax implications.

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Corporate Transparency

Since October 1, 2020, most private companies in BC have been required to keep and maintain a registry of beneficial owners.[3] Although the type of information required is similar to the LOTR, corporate transparency rules are broader, covering influence, control and relationships where parties act in concert.

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Once the public corporate transparency register rolls out, companies in BC won’t be able to file annual reports without submitting beneficial owner details.

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Corporate-Owned Land and Trust Planning

Where corporate and land transparency overlap, as is the case for BC Companies that own land, it will be critical to ensure consistency between LOTR and CTR filings. Before reporting land ownership, companies should review their corporate transparency register and seek legal advice if needed. Likewise, corporate administrators or directors responsible for maintaining records should review past LOTR filings before submitting information to the CTR.

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As the LOTR and CTR work together, it will soon be easy to identify beneficial owners of land and their companies in BC – regardless of whether those individuals have done anything wrong. While criminals should not be able to hide behind corporate entities, law-abiding taxpayers should still have the right to organize their affairs privately and legally.

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One notable concern is that company owners who’ve followed sound tax and estate planning advice may find their family trust information — including beneficiaries — made public. These decisions are deeply personal, and this level of exposure represents a significant erosion of privacy.

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Conclusion

However earnest the government’s push for transparency may be, it also needs to protect the freedoms and privacy of its citizens. Currently, the LOTR cannot be searched without registering for a LTSA account. We expect the CTR to have similar safeguards. Still, these safeguards may not be sufficient.

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What’s clear is that tax authorities in Canada — and possibly abroad — will have access to this transparency information. As such, clients would be wise to ensure that their legal and tax advisors are aligned across land transparency, corporate filings, and annual tax returns (including new trust reporting obligations).

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Now is the time to review and update your business succession and estate plans.

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End notes

[1] As defined in the Land Owner Transparency Act, SBC 2019, c 23.

[2] There are other material legal risks involved in adding a child on title as joint owner. Seek legal advice for your circumstances before making any change to title.

[3] While the Business Corporations Act, SBC 2002, c 57, does not define “beneficial owner”, it does define “beneficially own” as including ownership through any trustee, personal or other legal representative, agent or other intermediary.

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Acquiring an operating business is a significant undertaking that demands a careful balance of strategic vision, financial prudence, and legal foresight. Whether the transaction is structured as a share purchase or an asset acquisition, the buyer must approach the process with a clear understanding of the business’s current state, its future potential, and the risks that may be inherited through the transaction.

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Part 1: Preliminary Considerations and the Role of Due Diligence

At the heart of this process lies due diligence—a comprehensive investigation that enables the buyer to make informed decisions about the acquisition of the target business and negotiate appropriate protections for the specific risks the subject business presents. This first part of the article explores the foundational considerations a buyer must address before proceeding with an acquisition and examines the purpose, scope, and value of due diligence in the context of mergers and acquisitions.

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Preliminary Considerations

Before engaging in formal due diligence or entering into negotiations, a prospective buyer should reflect on several critical preliminary considerations. These early-stage reflections help shape the direction of the transaction and ensure that the buyer’s objectives are aligned with the realities of the target business.

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One of the foremost considerations is strategic alignment. The buyer must assess whether the target business complements its existing operations, fills a gap in its market presence, or offers access to new technologies, customer bases, or geographic regions. Acquisitions are often pursued to accelerate growth, diversify revenue streams, or achieve economies of scale. However, without a clear strategic rationale guiding the acquisition, the buyer will have difficulty ensuring the transaction is appropriately vetted and documented.

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Financial capacity is another essential factor. The buyer must evaluate whether it has the resources to fund the acquisition, including not only the purchase price but also the ancillary costs associated with legal, accounting, and advisory services. In many cases, the buyer may need to secure external financing, which introduces additional complexity and timing considerations. Understanding the financial implications of the transaction at the outset helps avoid delays and ensures that the buyer can act decisively when the opportunity arises.

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The structure of the transaction also warrants early attention. Buyers must consider whether to pursue a share purchase, in which they acquire ownership of the target company itself, or an asset purchase, in which they acquire select assets and liabilities from the target. Each structure carries distinct legal, tax, and operational consequences. For example, a share purchase may be simpler in terms of continuity but may expose the buyer to hidden liabilities. An asset purchase, by contrast, allows the buyer to cherry-pick assets and avoid certain obligations, but may require more extensive third-party consents and result in higher transaction costs due to the application of transfer taxes and registration fees. Taxation considerations also factor heavily into the structure of most transactions, and often dictate that pre-transaction reorganization of the seller’s (or buyer’s) business structure may benefit one or both parties to the proposed transaction.

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Confidentiality and exclusivity are also important at this stage. Before sensitive information is exchanged, the parties typically enter into a confidentiality agreement to protect proprietary data and trade secrets. In some cases, the buyer may also seek an exclusivity agreement to prevent the seller from negotiating with other potential buyers during the due diligence period. These agreements help create a secure environment for open dialogue and information sharing.

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Finally, the parties often execute a letter of intent (LOI) or term sheet to outline the key terms of the proposed transaction. While typically non-binding, the LOI serves as a roadmap for the negotiation and due diligence process. It may include provisions regarding price, structure, timelines, and conditions precedent, including a clause that makes the transaction subject to the buyer’s satisfactory completion of due diligence.

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Understanding Due Diligence

Due diligence is the investigative process through which a buyer evaluates the target business’ operations, financial condition, legal obligations, and potential risks. It is a cornerstone of any acquisition, providing the buyer with the information needed to confirm the value of the business, identify red flags, and negotiate appropriate contractual protections to mitigate the risks associated with any concerns identified throughout the process. Due diligence is not merely a legal formality; it is a critical exercise in risk management and informed decision-making.

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The scope of due diligence is broad and multifaceted. It encompasses legal, financial, tax, operational, and commercial inquiries, among others. The process typically begins concurrently with the negotiation of the LOI (with due diligence in respect of key financial and operational matters having been carried out in advance of the LOI negotiation to ensure the transaction is a strategic fit) and runs concurrently with the negotiation of the definitive purchase agreement. During this period, the buyer’s and their advisors review documents, conduct interviews, inquire with regulators and business partners of the target, and perform analyses to uncover any issues that may affect the transaction or the post-closing integration of the business.

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The Purpose and Value of Due Diligence

The primary purpose of due diligence is to enable the buyer to make an informed decision about whether to proceed with the transaction and on what terms. It allows the buyer to assess the true value of the business, understand its liabilities, and identify any legal or operational risks that may impact future performance. In this sense, due diligence serves as both a diagnostic tool and a negotiation lever.

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Through due diligence, the buyer can validate the assumptions underlying the purchase price and financial projections. For example, a review of the target’s financial statements may reveal inconsistencies in revenue recognition, underfunded liabilities, or unsustainable margins. These findings can lead to adjustments in the purchase price or the inclusion of earn-out provisions to align incentives.

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Due diligence also helps the buyer identify areas where contractual protections are needed. If the investigation uncovers unresolved litigation, regulatory non-compliance, failure to appropriately document key business relationships with binding legal agreements, or environmental liabilities, the buyer may seek specific indemnities, covenants, or warranties in the purchase agreement to mitigate the risk of loss or expense arising from these matters. In some cases, the buyer may require that a portion of the purchase price be held in escrow to cover potential claims for breach of the warranties or covenants provided by the seller.

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Additionally, due diligence informs the structuring and documentation of the transaction. It may reveal the need for third-party consents, regulatory approvals, or ancillary agreements such as transition services arrangements, updated employment contracts, or the implementation of written agreements with key customers, suppliers, and business partners. It also enables the buyer to plan for the integration of the target’s operations, systems, and personnel, which is critical to realizing the anticipated synergies of the acquisition.

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Types of Due Diligence

Due diligence is typically divided into several categories, each requiring specialized expertise. Legal due diligence focuses on the target’s corporate structure, contracts, litigation, employment matters, intellectual property, and regulatory compliance. Financial due diligence examines the accuracy of financial statements, revenue streams, cash flow, and accounting policies. Tax due diligence assesses the target’s tax filings, liabilities, and the tax implications of the transaction for both parties.

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Commercial due diligence evaluates the target’s market position, competitive landscape, customer relationships, and growth prospects. Operational due diligence looks at supply chains, customer and supplier relationships, IT systems, facilities, and human resources. In certain industries, environmental due diligence is essential to assess potential liabilities arising from contamination or regulatory breaches. Increasingly, buyers also conduct privacy and cybersecurity due diligence to evaluate the target’s data protection practices and compliance with privacy laws such as Personal Information Protection Act, Personal Information Protection and Electronic Documents Act, or the E.U.'s General Data Protection Regulation.

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Limitations of Due Diligence

Despite its importance, due diligence is not without limitations. Time constraints often pressure buyers to complete their investigations quickly, especially in competitive bidding scenarios. Cost considerations may limit the scope of the review, particularly for smaller transactions. Sellers may restrict access to sensitive information or key personnel, citing confidentiality or competitive concerns. In some cases, the buyer must rely on representations and warranties in the purchase agreement to address risks that cannot be fully investigated.

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Furthermore, due diligence is inherently limited by the quality and completeness of the information provided. Some issues may only come to light after closing, underscoring the importance of robust contractual protections and post-closing remedies. For this reason, buyers often supplement their diligence with warranty and indemnity insurance, which can provide coverage for unknown risks and facilitate smoother negotiations.

Sellers can help build trust with potential buyers and facilitate an efficient due diligence process by organizing business documentation in a practical and accessible manner, and ensuring comprehensive availability and disclosure of all information relevant to the business to the buyer from the outset, as buyers may second guess their acquisition if they feel the seller is withholding pertinent information.

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Part 2: The Due Diligence Process, Documentation, and Advisory Team

Given the foundational importance of due diligence in the acquisition of an operating business, it is essential to explore how the due diligence process is conducted in practice. This part of the article delves into the mechanics of due diligence, the types of documents and information typically reviewed, and the professionals who play a critical role in guiding the buyer through this complex and often time-sensitive phase of the transaction.

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The Due Diligence Process

Except for preliminary due diligence related to fundamental matters confirming an acquisition is strategically appropriate, the due diligence process typically commences concurrently with the negotiation of a letter of intent or term sheet, which outlines the preliminary terms of the transaction, and the execution of a non-disclosure agreement between the parties. At this stage, the buyer is granted access to a range of information about the target business, often through a secure virtual data room or through other methods of document disclosure such as the delivery of document packages via email or secure portal. The process runs concurrently with the negotiation of the LOI, the definitive purchase agreement, and other transaction documents, allowing the buyer to tailor contractual protections based on the findings of the due diligence investigation. Often, more sensitive business information is withheld by the seller until later in the process when the definitive agreement is nearly settled or after it is settled but remains subject to certain limited conditions in favour of the buyer. This helps to protect the seller against disclosing information that could later be used for purposes adverse to the seller. For example, if the buyer were to learn the information before a binding agreement was in place and then back out of the transaction and use the information to its own advantage in a manner competitive or otherwise adverse to the seller.

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The first step in the due diligence process is the preparation and submission of a due diligence request list. This document outlines the categories of information the buyer wishes to review, including corporate records, financial statements, material contracts, employee agreements, intellectual property documentation, regulatory filings, tax filings, and many others that vary based on the specific target business. The request list is typically customized to reflect the nature of the target’s business, the industry in which it operates, and the specific concerns of the buyer. For example, a technology company may require a more detailed review of software licenses and data privacy policies, while a manufacturing business may necessitate a focus on environmental compliance and equipment leases.

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Once the request list is submitted, the seller’s legal and financial advisors coordinate the collection and organization of the requested documents; as noted above, an invested seller will have taken time in advance to collect and organize the relevant documentation, enabling swift identification and disclosure of relevant documents upon receipt of a request list. These materials are uploaded to a virtual data room, which allows the buyer’s team to access and review them remotely or may be delivered to the buyer electronically or otherwise for their review. The data room or other document disclosure system is often structured to mirror the categories in the request list, facilitating efficient navigation and review.

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As the buyer’s team reviews the documents, they may identify gaps in the information provided or areas that require further clarification. These follow-up inquiries are typically submitted in writing and may be supplemented by interviews or meetings with key members of the target’s management team. The seller may impose limitations on access to certain individuals or documents, particularly if the buyer is a competitor, in order to protect sensitive information and maintain business continuity until such time as the seller has certainty the transaction is going to proceed.

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Throughout the process, the buyer’s advisors maintain detailed notes and prepare internal reports summarizing their findings. These reports highlight areas of concern, assess the materiality of identified risks, and recommend specific contractual protections or deal modifications. The findings of the due diligence investigation directly inform the negotiation of the purchase agreement, including the scope of representations and warranties, the allocation of liabilities, and the inclusion of indemnification provisions or escrow arrangements.

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Documentation Reviewed During Due Diligence

The scope of documentation reviewed during due diligence is extensive and varies depending on the nature of the transaction. However, certain categories of documents are universally relevant and form the backbone of any due diligence investigation.

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Corporate records are among the first documents reviewed. These include the target’s articles of incorporation, bylaws, shareholder agreements, board resolutions, and minute books. The buyer’s legal team examines these documents to confirm the legal existence of the target, the authority of its directors and officers, and the ownership structure of its shares or assets. Particular attention is paid to any restrictions on share transfers, pre-emptive rights, or change-of-control provisions that may affect the transaction.

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Financial documents are equally critical. The buyer’s accountants and financial advisors review audited and unaudited financial statements, tax returns, budgets, forecasts, and management reports. This review aims to assess the financial health of the business, identify trends or anomalies, and evaluate the accuracy of the seller’s representations. Special attention is given to revenue recognition policies, contingent liabilities, and off-balance-sheet arrangements.

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Material contracts are another key area of focus. These include customer and supplier agreements, leases, loan documents, employment contracts, intellectual property licenses, and joint venture agreements. The buyer’s legal team reviews these contracts to identify any unusual terms, termination rights, change-of-control clauses, or consent requirements. Contracts that are critical to the business’s operations or revenue generation are scrutinized particularly closely.

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Employment and benefits documentation is also reviewed to assess the target’s obligations to its workforce. This includes employment agreements, collective bargaining agreements, benefit plans, pension arrangements, and records of past or pending employment disputes. The buyer must understand the terms of employment for key personnel, the cost of employee benefits, and any potential liabilities arising from terminations or non-compliance with labour laws.

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In addition, the buyer reviews documentation related to intellectual property, including patent registrations, trademark filings, copyright licenses, other intangible property, and confidentiality agreements. This review ensures that the target owns or has valid rights to use the intellectual property necessary for its operations and that such rights can be transferred or assigned as part of the transaction.

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Environmental reports, regulatory filings, litigation records, insurance policies, and data privacy policies are also commonly reviewed, depending on the nature of the business. Each of these categories may reveal risks that require mitigation through deal structuring or post-closing integration planning.

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The Role of Advisors in Due Diligence

Due diligence is a multidisciplinary effort that requires the coordination of various professionals, each bringing specialized expertise to the process. The buyer’s internal management team plays a central role in assessing the commercial and strategic aspects of the transaction. However, external advisors are indispensable in conducting a thorough and legally sound investigation.

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Legal counsel is typically responsible for coordinating the overall due diligence process. This includes drafting the request list, reviewing legal documents, identifying risks, and advising on the legal implications of the findings. Corporate lawyers often lead the process, supported by specialists in areas such as employment law, real estate, intellectual property, tax, and regulatory compliance. The legal team also plays a key role in drafting and negotiating the purchase agreement and related documents.

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Accountants and financial advisors conduct the financial and tax due diligence. They analyze the target’s financial statements, assess the quality of revenue, evaluate working capital requirements, and identify tax exposures. Their findings are critical to validating the purchase price and structuring the transaction in a tax-efficient manner.

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Other specialists may be engaged as needed. Environmental consultants assess compliance with environmental laws and the presence of any contamination or remediation obligations. IT consultants evaluate the target’s technology infrastructure and cybersecurity practices. Insurance advisors review the adequacy of coverage and identify any gaps or exclusions. Appraisers may be retained to confirm the value of specialized equipment or real estate holdings. In cross-border transactions, local counsel may be retained to advise on jurisdiction-specific legal and regulatory issues.

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Effective communication among the advisory team is essential. Each advisor must understand the scope of their responsibilities, the timeline for completion, and the reporting structure. Regular updates and coordination meetings help ensure that issues are identified early and addressed in a timely manner. The lead legal counsel typically acts as the central point of contact, synthesizing the findings of the various advisors and presenting a cohesive risk assessment to the buyer.

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Part 3: Asset Versus Share Purchase, Tax Considerations, and Financing the Transaction

One of the most consequential decisions to be made is how the transaction will be structured. As the due diligence process unfolds and the buyer gains a clearer understanding of the target business, they may find that one structure provides advantages that outweigh the others. Ultimately, the decision on structure has far-reaching implications for liability, taxation, regulatory compliance, and operational continuity. This part of the article explores the distinctions between these possible structures with a specific focus on asset purchases and share purchases, the tax considerations that influence the decision, and the various methods by which such transactions are typically financed.

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Asset Purchase Versus Share Purchase

In an asset purchase, the buyer acquires specific assets and liabilities of the target business, rather than the business entity itself. This structure allows the buyer to select which assets to acquire—such as equipment, inventory, intellectual property, and customer contracts—and which liabilities to assume. The remaining assets and liabilities remain with the seller, who retains ownership of the legal entity through which the business was operated prior to the transaction.

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By contrast, a share purchase involves the acquisition of the shares of the target company, resulting in a change of ownership at the shareholder level. The legal entity remains intact, along with all of its assets, liabilities, contracts, and obligations. From an operational standpoint, this structure often results in a smoother transition, as the business continues to operate under the same legal identity. However, by acquiring the legal entity the buyer exposes itself to the risk that the legal entity carries with it latent liabilities that went undiscovered in due diligence, as well as the risk that they may be paying for assets owned by the target entity that do not fit the strategic basis for the acquisition. In a share purchase, buyers are unable to specifically select the assets they acquire and liabilities they assume, unless the seller undergoes a reorganization and transfers unwanted assets and liabilities to a different entity prior to completing the transaction.

Each structure offers distinct advantages and disadvantages. Asset purchases are generally favored by buyers who wish to avoid inheriting unknown or contingent liabilities. By carefully defining the scope of the transaction, the buyer can exclude problematic assets or obligations, such as pending litigation, environmental liabilities, or unfunded pension plans. Asset purchases also allow for a step-up in the tax basis of the acquired assets, which can result in future tax savings through increased depreciation deductions.

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However, asset purchases can be more complex to execute. They often require the assignment or novation of individual contracts, leases, and licenses, many of which may contain anti-assignment clauses or require third-party consents. Regulatory approvals may also be needed, particularly in regulated industries. In addition, asset purchases may trigger transfer taxes, sales taxes, or other transaction costs that would not apply in a share purchase.

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Share purchases, on the other hand, are typically simpler from a logistical perspective. Because the legal entity remains unchanged, there is no need to reassign contracts or licenses (though some may require third party consent to the change of control of the legal entity), and the business can continue operating without interruption. This continuity is particularly valuable in businesses with long-term customer relationships, regulatory licenses, or complex supply chains. Share purchases may also be more attractive to sellers, as they allow for a clean exit and may result in more favorable tax treatment.

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Nevertheless, share purchases expose the buyer to all of the target’s liabilities, including those that may not be apparent during due diligence. To mitigate this risk, buyers often negotiate robust representations, warranties, and indemnities in the purchase agreement, and may require a portion of the purchase price to be held in escrow or backed by warranty and indemnity insurance.

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The decision between an asset and share purchase is ultimately driven by a combination of legal, tax, commercial, and practical considerations. It is not uncommon for the structure to evolve during the course of negotiations, particularly if due diligence reveals issues that make one structure more advantageous than the other.

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Tax Considerations

Tax implications are a central factor in structuring and negotiating any business acquisition. Both the buyer and the seller must consider how the transaction will affect their respective tax positions, both at the time of closing and in the future.

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In an asset purchase, the buyer typically benefits from a step-up in the tax basis of the acquired assets to their fair market value. This allows the buyer to claim higher depreciation or amortization deductions, reducing taxable income in future years. However, the seller may face higher taxes, particularly if the assets have appreciated significantly in value. The gain on the sale of assets may be taxed as ordinary income or capital gains, depending on the nature of the assets and the seller’s tax profile.

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Asset purchases may also trigger sales taxes, land transfer taxes, or other transactional levies, depending on the jurisdiction and the types of assets involved. These costs must be factored into the purchase price and may require careful planning to minimize their impact.

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In a share purchase, the buyer acquires the shares of the target company, and the tax attributes of the company—such as net operating losses, tax credits, and depreciation pools—remain intact. The seller typically realizes a capital gain on the sale of shares, which may be taxed at a lower rate than ordinary income. This tax treatment is often more favorable to the seller and may influence their willingness to agree to a share sale.

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However, the buyer does not receive a step-up in the basis of the underlying assets, which may limit future tax deductions for the operating entity. In addition, the buyer assumes responsibility for any unpaid taxes or tax liabilities of the target company, including those arising from prior periods. Tax due diligence is therefore critical to identify any exposures and to negotiate appropriate indemnities or purchase price adjustments.

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Cross-border transactions introduce additional complexity, including issues related to withholding taxes, transfer pricing, currency exchange considerations, and the application of tax treaties. Buyers must also consider the impact of the transaction on the consolidated tax position of their corporate group, particularly if the target will be integrated into an existing structure.

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To navigate these complexities, buyers typically engage tax advisors early in the process to model different transaction structures, assess the tax implications, and assist in negotiating tax-related provisions in the purchase agreement. These provisions may include representations and warranties regarding tax compliance, covenants to file certain elections, and indemnities for pre-closing tax liabilities.

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Financing the Transaction

Financing is another critical component of any acquisition. Buyers must determine how they will fund the purchase price and associated transaction costs, and whether external financing will be required. The choice of financing structure can influence the timing, risk profile, and overall feasibility of the transaction.

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Many acquisitions are financed through a combination of equity and debt. Equity financing may come from the buyer’s internal resources, private investors, or institutional partners. Debt financing may be obtained from commercial banks, private lenders, or capital markets. The terms of the financing—such as interest rates, covenants, and repayment schedules—must be carefully negotiated to align with the buyer’s cash flow and strategic objectives.

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In leveraged buyouts, the buyer uses a significant amount of borrowed funds to finance the acquisition, with the target company’s assets often serving as collateral. While this approach can enhance returns on equity, it also increases financial risk and may impose operational constraints due to debt service obligations.

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Buyers may also explore alternative financing options, such as seller financing, earn-outs, or contingent payments. In seller financing, the seller agrees to accept a portion of the purchase price in the form of a promissory note or deferred payment. This arrangement can bridge valuation gaps and align the interests of the parties. Earn-outs tie a portion of the purchase price to the future performance of the business, providing incentives for continued success but also introducing potential for post-closing disputes.

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Regardless of the financing method, buyers must ensure that the necessary funds will be available at closing and that the financing arrangements are consistent with the terms of the purchase agreement. Lenders may require due diligence reports, legal opinions, or other documentation as conditions precedent to funding. Coordination between the buyer’s legal, financial, and lending teams is essential to ensure a smooth and timely closing.

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Part 4: Documenting the Transaction, Disclosure Schedules, and Closing

Once a buyer has completed its due diligence and the parties to a transaction have agreed on the structure and financing related to the transaction, attention turns to the documentation of the deal. This phase is critical, as it translates the commercial understanding between the buyer and the seller into legally binding obligations. The quality and precision of the transaction documents can significantly influence the success of the acquisition, both at closing and in the post-closing period. This part of the article explores the key documents involved in a business acquisition, the role of disclosure schedules, and the procedures surrounding closing.

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Documenting the Transaction

The central document in any acquisition is the purchase agreement. Depending on the structure of the transaction, this will be either a share purchase agreement (SPA), an asset purchase agreement (APA), or take some other form where a statutory transaction process such an amalgamation or plan of arrangement is relied upon (through such processes fall outside the scope of this article). While all types of agreements serve the same fundamental purpose—transferring ownership of a business—they differ in form and content to reflect the nature of what is being sold.

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An SPA governs the sale of the shares of the target company. It typically includes provisions addressing the purchase price, representations and warranties, covenants, conditions to closing, indemnification, and post-closing obligations. Because the buyer is acquiring the entire legal entity, the SPA must address all aspects of the company’s operations, liabilities, and governance both historically, in the period between the execution of the agreement and the completion of the sale, and often during a post closing period that may range from months to several years following completion.

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An APA, by contrast, governs the sale of specific assets and liabilities. It must clearly identify the assets being transferred—such as equipment, inventory, contracts, intellectual property, and goodwill—as well as any excluded assets. Similarly, the APA must specify which liabilities the buyer is assuming and which remain with the seller. This level of specificity requires careful drafting and coordination with the business and legal teams to ensure that nothing is inadvertently omitted or included.

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In both types of agreements, representations and warranties play a central role. These are statements made by the seller (and sometimes the buyer) regarding the condition of the business, its assets, liabilities, operations, and compliance with laws. Representations and warranties serve two primary functions: they provide the buyer with assurance about the state of the business, and they form the basis for post-closing remedies if the statements prove to be false or misleading.

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The scope and detail of the representations and warranties are often the subject of intense negotiation. Buyers typically seek broad and detailed representations to uncover potential risks and preserve their rights to indemnification should those risks materialize into liability, loss, or other expenses the buyer did not intend to assume. Sellers, on the other hand, aim to limit their exposure by narrowing the scope of the representations, qualifying them with knowledge or materiality thresholds, and capping their liability.

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Covenants are another important component of the purchase agreement. These are promises by the parties to take or refrain from certain actions, either before or after closing. Pre-closing covenants may include obligations to operate the business in the ordinary course, obtain third-party consents, or refrain from soliciting competing offers. Post-closing covenants may address matters such as non-competition, confidentiality, employee retention, or the transition of customer relationships.

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Conditions to closing are provisions that specify the circumstances under which the parties are obligated to complete the transaction. These may include the receipt of regulatory approvals, the absence of material adverse changes, the accuracy of representations and warranties, and the performance of covenants. If any of the conditions are not satisfied or waived, the parties may have the right to terminate the agreement without liability.

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The Role of Disclosure Schedules

Disclosure schedules are an integral part of the purchase agreement. They serve as the seller’s opportunity to qualify or limit the representations and warranties made in the agreement by disclosing exceptions, qualifications, or additional information. For example, if the seller represents that there are no pending lawsuits, the disclosure schedule may list any existing litigation that would otherwise render the representation inaccurate.

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The preparation of disclosure schedules is a meticulous and time-consuming process. It requires the seller to review each representation and warranty and determine whether any disclosures are necessary. The schedules must be accurate, complete, and consistent with the information provided during due diligence. Inaccurate or incomplete disclosures can lead to post-closing disputes and potential liability for the seller.

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From the buyer’s perspective, the disclosure schedules are a critical tool for verifying the accuracy of the seller’s representations and for identifying any issues that may require further investigation or negotiation. The buyer’s legal team must carefully review the schedules to ensure that all material matters have been disclosed and that there are no surprises at closing.

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In some cases, the parties may agree to update the disclosure schedules between signing and closing to reflect new developments. This approach allows for flexibility but also introduces the risk that material changes could affect the buyer’s willingness to proceed. To address this, the agreement may include provisions allowing the buyer to terminate the transaction or seek remedies if the updated disclosures reveal significant issues.

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Closing the Transaction

The closing of a business acquisition is the culmination of weeks or months of negotiation, diligence, and documentation. It is the point at which ownership of the business is formally transferred, and the parties fulfill their respective obligations under the purchase agreement.

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Closing may occur simultaneously with the signing of the purchase agreement (a “sign-and-close” transaction) or at a later date (a “sign-and-close-later” transaction). In the latter case, the period between signing and closing is used to satisfy conditions precedent, obtain consents, and prepare for the transition.

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The closing process involves the execution and exchange of various documents, the delivery of funds, and the transfer of ownership interests. The specific documents required at closing depend on the structure of the transaction and the terms of the agreement, but typically include:

1. A bill of sale or share transfer documentation
2. Assignment and assumption of contracts, agreements, licenses, permits, and other business assets
3. Applications to third parties for their consent to the assignment of contracts, agreements, licenses, permits, and other business assets, or to the change of the control of the target entity, as may be necessary
4. Resolutions of the board and shareholders approving the transaction
5. Officer’s certificates confirming the business is in substantial compliance with the purchase agreement at the closing date
6. Director and officer resignations, as applicable
7. Legal opinions
8. Escrow agreements
9. Non-competition and confidentiality agreements
10. Transition services agreements
11. Updated disclosure schedules
12. Closing certificates confirming the satisfaction of conditions

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In addition to these documents, the parties may be required to make regulatory filings, pay transfer taxes, record changes in ownership with government authorities, or execute other transaction specific documents necessitated by the terms of the purchase agreement. Coordination among legal, financial, and administrative teams is essential to ensure that all closing deliverables are prepared, executed, and delivered in accordance with the agreement.

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Post-closing, the parties may continue to interact in various ways. The seller may provide transition services, assist with customer or employee communications, or cooperate in the transfer of licenses and permits. The buyer may monitor the performance of the business, pursue indemnification claims, or integrate the acquired operations into its existing structure.

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The success of the closing—and the transaction as a whole—depends on thorough preparation, clear communication, and careful execution. A well-managed closing process not only ensures legal compliance but also sets the tone for a smooth and productive post-acquisition relationship.

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Part 5: Ancillary Agreements, Post-Closing Considerations, and Final Reflections

The successful acquisition of an operating business does not end at the closing table. In fact, the closing marks the beginning of a new phase in the transaction lifecycle—one that involves integration, compliance, and the fulfillment of ongoing obligations. This final part of the article explores the ancillary agreements that often accompany a business acquisition, the typical post-closing steps that buyers must undertake, and some concluding reflections on best practices for navigating the acquisition process.

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Ancillary Agreements and Supporting Documentation

In addition to the primary purchase agreement, most acquisitions involve a suite of ancillary agreements that address specific aspects of the transaction or the post-closing relationship between the parties. These documents are essential to ensuring a smooth transition and to protecting the interests of both buyer and seller.

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One common ancillary agreement is the non-competition and non-solicitation agreement. In this document, the seller agrees not to compete with the business or solicit its customers or employees for a specified period following the sale. These covenants are particularly important when the seller is an individual or a closely held company with deep industry ties. The scope and duration of such restrictions must be reasonable to be enforceable, and they are often subject to negotiation.

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Another frequently used agreement is the transition services agreement (TSA). This document outlines the services that the seller will provide to the buyer for a limited time after closing, such as IT support, accounting, or administrative assistance. TSAs are especially useful when the buyer is acquiring a business that was previously integrated into a larger corporate group and needs time to establish standalone operations.

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Escrow agreements are also common, particularly in transactions involving indemnification obligations. Under an escrow arrangement, a portion of the purchase price is held by a third-party escrow agent for a defined period to cover potential claims by the buyer. The terms of the escrow—including the amount, duration, and release conditions—are negotiated as part of the purchase agreement.

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Other ancillary documents may include employment, consulting, or contractor agreements for key personnel, intellectual property assignments, lease assignments, supplier or customer consents, and regulatory filings. Each of these documents plays a role in facilitating the transfer of the business and ensuring continuity of operations.

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Post-Closing Considerations

The period following closing is critical to the long-term success of the acquisition. While the legal transfer of ownership may be complete, the buyer must now turn its attention to integrating the acquired business, fulfilling post-closing obligations, and monitoring for any issues that may arise.

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One of the first tasks post-closing is to notify stakeholders of the change in ownership. This includes employees, customers, suppliers, regulators, and financial institutions. Clear and timely communication helps maintain trust and continuity, and may be required under certain contracts or regulatory regimes.

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The buyer must also update corporate records and registrations to reflect the new ownership. This may involve filing documents with corporate registries, tax authorities, and licensing bodies. In asset purchases, title to real property, vehicles, and intellectual property must be formally transferred and recorded.

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Integration planning is another key post-closing activity. The buyer must align the acquired business with its existing operations, systems, and culture. This may involve consolidating IT platforms, harmonizing HR policies, renegotiating supplier contracts, and aligning branding and marketing strategies. Effective integration requires coordination across departments and clear leadership from the buyer’s management team.

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Buyers should also monitor compliance with post-closing covenants and deadlines. These may include obligations to make contingent payments (such as earn-outs), file tax elections, or maintain certain operational standards. Failure to comply with these obligations can result in legal disputes or financial penalties.

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Finally, the buyer should remain vigilant for any breaches of representations and warranties or other issues that may give rise to indemnification claims. This includes monitoring for undisclosed liabilities, customer disputes, or regulatory investigations. Timely identification and documentation of such issues is essential to preserving the buyer’s rights under the purchase agreement.

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Final Reflections

Acquiring an operating business is a multifaceted process that requires careful planning, rigorous analysis, and disciplined execution. From the initial strategic assessment to the final post-closing integration, each phase of the transaction presents unique challenges and opportunities.

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The key to a successful acquisition lies in preparation and collaboration. Buyers must assemble a skilled team of legal, financial, and operational advisors, engage in thorough due diligence, and negotiate clear and comprehensive documentation. They must also remain flexible and responsive as new information emerges and circumstances evolve.

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While no transaction is without risk, a well-executed acquisition can create significant value, accelerate growth, and strengthen competitive positioning. By approaching the process with diligence, transparency, and strategic intent, buyers can maximize the benefits of their investment and lay the foundation for long-term success.

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Acquisition Checklist

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1. Due Diligence Checklist

The following checklist consists of a non-comprehensive example of types of documents and information a buyer may wish to review with respect to its target business and any subsidiary companies owned by the target business, or assets being acquired in the transaction.

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Corporate Matters

• Organizational chart and list of subsidiaries
• Shareholder agreements and capitalization tables
• Corporate charter documents
• Board and shareholder meeting minutes
• Documentation evidencing all historical corporate transactions and reorganizations
• Details of all agreements that may affect the ownership or transfer of securities

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Financial Information

• Audited and unaudited financial statements (3–5 years)
• Bookkeeping ledger and history of financial transactions
• Communications and reports to and from auditor, stakeholders regarding finances
• Budgets, forecasts, management reports, strategic and operational plans
• Tax returns and assessments
• Elections, planning, rulings, analysis, opinions of accountants/auditors
• Details of outstanding debts and liabilities
• Details of accounts receivable, work in progress, and other current assets
• Sales reports, customer information, and supplier information
• Terms of all existing financing arrangements with lenders
• Reports on any breaches of or non-compliance with financing arrangements
• Details of liens, encumbrances, or other security affecting the target’s assets or the assets of the target’s subsidiaries
• Details of loans or guarantees granted by the company and subsidiaries
• Details of banks, bank accounts, authorized signatories, and other banking information of the target

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Legal and Regulatory

• Material contracts and agreements including service, supplier, customer, franchise, lease, license, regulatory, governmental, transactional (buying and selling assets, shares of subsidiaries etc.), settlement, and restrictive covenant agreements
• Litigation history and pending claims
• Licenses, permits, and regulatory filings
• Environmental compliance documents
• All amendments, renegotiations, or terminations of the above
• Summary of historical and current breaches or non-compliance with above
• Third party approvals and regulatory consents that may affect the transaction
• Litigation proceedings, threatened or actual, and all materials, documents, and information pertaining to same
• Regulatory proceedings, threatened or actual, and all materials, documents, and information pertaining to same

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Employment and HR

• List of employees summarizing key information including, age, salary, term of service, and job title with summary of key responsibilities
• Employee contracts and benefit plans (pension, health, severance agreements etc.)
• Collective bargaining agreements
• Employment policies and manuals
• Pending or historical employment disputes
• List of contractors and consultants with key terms of relationship summarized
• Contractor and consultant agreements
• Copies of all incentive programs (option plans, profit sharing plans, bonus plans etc.)
• Summary of compliance issues, by both employer and employee
• Current or historical employment related claims, actual or threatened
• Historical and current WorkSafe and Occupational Health and Safety reports, citations, incidents, claims, settlements, and the outcomes thereof

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Intellectual Property

• IP ownership and registration documents

• Licensing agreements

• Confidentiality and invention assignment agreements

• List of IP assets, such as trade secrets, Patents, trademarks, domain names/websites, priority systems or procedures

• Copies of all third-party agreements regarding use of intellectual property

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IT and Data Privacy

• IT infrastructure and data storage overview and summary
• Cybersecurity policies and incident history
• Data protection compliance (e.g., PIPA, PIPEDA, GDPR)
• Contracts, agreements and policies related to IT and data privacy management
• Summaries of breaches or non-compliance, historical and current, with data privacy obligations

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Physical Assets and Real Estate

• Confirm assets subject to registration and real estate are registered in the name of the target or the appropriate subsidiary
• Physical inspection to ensure assets and real estate are properly maintained and in good condition
• Confirm actual physical assets are congruent with financial information provided
• Copies of all lease agreements related to the physical assets and real estate being acquired
• Copies of appraisals and inspections, operating manuals, and drawings and specifications pertaining to the assets or real estate
• Environmental reports, studies, audits, assessments, and engagements
• Disclosures of non-compliance with Environmental or other regulatory laws regarding physical assets and real estate, as well as any leases or security agreements related thereto
• Copies of insurance policies and warranties applicable to assets
• Company policy manuals and procedures related to the above
• Contracts or agreements with third parties related to the above

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2. Share Purchase Procedure Checklist

Pre-Signing of Purchase Agreement

• Non-Disclosure Agreement
• Exclusivity Agreement
• Negotiate and sign letter of intent (LOI)
• Conduct due diligence (see above checklist)
• Draft share purchase agreement (SPA) in accordance with principal LOI terms
• Prepare disclosure schedules to reflect terms of SPA

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Pre-Closing

• Prepare closing documents and ancillary agreements necessary to complete transactions in accordance with terms of SPA
• Obtain regulatory and third-party consents
• Finalize financing arrangements
• Prepared updated corporate records to reflect completion of the transaction

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Closing

• Execute SPA and ancillary agreements
• Execute transfer documentation
• Pay purchase price and carry out covenants per the SPA
• Deliver executed closing certificates, ancillary agreements, and transfer documents

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3. Asset Purchase Procedure Checklist

Pre-Signing of Purchase Agreement

• Non-Disclosure Agreement
• Exclusivity Agreement
• Identify assets and liabilities to be transferred
• Conduct due diligence
• Draft asset purchase agreement (APA)
• Prepare schedules of assets and liabilities, also known as disclosure schedules

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Pre-Closing

• Obtain consents for contract assignments
• Address transfer taxes and registration expenses
• Prepare bills of sale, assignment agreements, and other transfer documentation as necessary
• Finalize ancillary agreements necessary to comply with terms of the APA

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Closing

• Execute APA, ancillary agreements and transfer documents
• Pay purchase price in accordance with the APA
• Deliver executed closing certificates, ancillary agreements, and transfer documents
• Transfer title to assets, remit transfer and registration taxes as applicable

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4. Typical Closing Document Checklist

• Signed purchase agreement (SPA or APA) with disclosure schedules attached
• Resolutions of buyer and seller authorizing the transaction
• Officer’s certificates confirming representations and warranties
• Resignations of directors and officers as applicable
• Legal opinions from counsel
• Non-competition and confidentiality agreements
• Regulatory and third party, notices, consents, and approvals
• Other ancillary agreements necessitated by the terms of the purchase agreement
• transfer documentation
• purchase price payment
• Transfer and registration tax remittance

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5. Post-Closing Steps Checklist

• Notify employees, customers, and suppliers
• Update corporate records and registers
• Register transfers and confirm regulatory records are updated
• File regulatory and tax notifications
• Integrate business systems and operations
• Monitor compliance with post-closing covenants contained in purchase agreement
• Resolve any indemnification claims
• Conduct post-closing audit or review
• Finalize earn-out or contingent payment calculations as dictated by payment provisions of purchase agreement

BC Housing Minister Ravi Kahlon announced a new policy in early July 2025 aimed at increasing housing construction by giving developers more time and flexibility to pay municipal development fees.

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Starting January 2026, BC developers can use on-demand surety bonds—already used in cities like Vancouver, Burnaby, and Surrey—instead of irrevocable letters of credit, which tie up capital by limiting developers’ ability to borrow additional funds. This change will allow developers to invest in new projects sooner and reduce carrying costs.

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The policy also extends the payment period: instead of paying the full amount within two years, developers can now pay 25% at permit approval and the remainder at occupancy or within four years, whichever is earlier.

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Developers have praised the initiative, citing current market challenges like high interest rates, weak presales, and limited credit. Developers are hoping that shifting municipal fee payments to the time of occupancy could enable more projects to proceed.

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Many investors have noted the harsh economic conditions forcing project delays and layoffs, calling the situation a “cost-of-delivery crisis.”

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The province hopes the policy will speed up construction and ease pressure on B.C.’s strained housing market.

Starting a business in British Columbia involves a series of strategic decisions, one of the most critical being the selection of an appropriate legal structure. The choice between conducting business as a sole proprietor, through the formation of a partnership, or by incorporating a company has far-reaching implications for liability, taxation, governance, and regulatory compliance. This article provides an overview of the primary business structures available in British Columbia—namely companies (also known as corporations), general partnerships, and limited partnerships—along with practical considerations and guidance on the formation, maintenance, and legal obligations associated with each structure. This article does not seek to comprehensively discuss all the structures available to business operators, but focuses on those structures intended for those seeking to operate a business with a view to making profit, as such community contribution companies, benefits companies, societies, and other business vehicles designed for businesses focused on societal change, rather than profit, have not been discussed. Additionally, while Limited Liability Partnerships are also a relatively common business structure in British Columbia, their use tends to be limited to professional services businesses such as lawyers and accountants, and as such they fall beyond the scope of this article.

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Preliminary Considerations Regarding Structuring a Business

The selection of the appropriate business structure for a given business should be guided by several key considerations.

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Liability

First and foremost is the issue of liability. Business owners must determine the extent to which they are willing to expose their personal assets to the risks and obligations of the business. In general partnerships, every partner is personally liable for the debts and obligations arising from the business’ operations, including all debts and obligations incurred by one’s partners even without a partner having knowledge or granting approval of those debts or obligations. In contrast, corporations and limited partnerships offer varying degrees of liability protection for the business owners’ (the company’s shareholders, or limited partnerships limited partners) personal assets.

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Taxation

Taxation is another critical consideration, and it is important that business operators to obtain tax and accounting advice before settling on the business structure through which they will operate their business. Partnerships are generally treated as “flow-through” entities for tax purposes, meaning that the partnership itself does not pay income tax. Instead, the income and losses of the partnership are allocated to the partners, who report them on their personal tax returns. By allocating partnership income and losses to the individual partners, the partners may be able to gain a tax benefit by setting off losses from other business ventures against partnership income, or by setting off partnership losses to reduce taxable income the partners may have received from other ventures. Companies, by contrast, are entities that are legally distinct from their shareholders. A company pays corporate income tax on its income, and shareholders are personally taxed again when they receive dividends from their company, there is no ability for the owners of a corporation to set off a corporation’s income or losses against their personal income or losses from other ventures or vice versa. However, companies may benefit their shareholders through other advantages, such as great ability to carry out tax planning and deferral, the ability to implement succession planning, the ability to split income, the availability of the small business tax deduction, and have the advantage of perpetual existence.

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Perpetual Existence

As independent legal entities companies will continue to exist in perpetuity despite the death or incapacitation of their owners, provided that the corporation complies with applicable laws and regulations and is not dissolved for non-compliance. This makes companies the best vehicle for conducting business if it is the intention of the owners to sell their business or pass it down to the next generation. While it is possible to affect the transfer of ownership of a partnership between generations or to other owners, it takes significantly more planning to ensure a partnership is properly maintained through such transactions.

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Administrative Costs and Expenses

Cost and administrative complexity are also important. Partnerships are generally less expensive and easier to maintain throughout their lifetimes, though the preparation of a comprehensive partnership agreement can be expensive. On the other hand, companies require more formalities to incorporate, and to ensure their ongoing compliance with applicable legislation. These formalities include the filing of incorporation documents with the BC Registrar of Companies, the preparation and maintenance of more substantial corporate records, and the filing of annual reports.

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Regardless of business structure, it is vital to the long-term success of any business that its constating documents and records be kept up to date ensure that there is clarity as to who owns and has decision making authority with respect to the business. Businesses that fail to maintain their records can be subject to fines, may be unilaterally dissolved by the Registrar, and may have trouble finding investors or buyers as these individuals are often cautious investing in businesses whose records do not clearly indicate who has owned and controlled the business throughout its existence.

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Companies

Incorporation of a Company

Incorporating a company under the British Columbia Business Corporations Act creates a separate legal entity distinct from its owners. This structure is ideal for businesses seeking limited liability for its owners, perpetual existence, and the ability to raise capital from investors or transfer the business to new owners.

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The incorporation process begins with reserving a corporate name through BC Registries and Online Services. The name must include a descriptive element (what the company does), a distinctive element (something unique to the company), and legal element such as “Limited”, “Incorporated,” or “Corporation”, or a related abbreviation such as “Ltd”, “Inc”, or “Corp”. A company name must not be substantially similar to, or be easily confused with, the name of an existing company. If it is the Registrar will not permit the name to be reserved or used. One may skip name reservation if they wish to incorporate a “numbered company” or a company with only a number as its name. Once the name is approved it will be reserved for a period of time, during which the incorporators must file an Incorporation Application, including an Incorporation Agreement and a Notice of Articles with the BC Registrar of Companies. Upon approval of those filings, the Registrar issues a Certificate of Incorporation that evidences the existence of the company.

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The Incorporation Application submitted by the incorporators must also appoint at least one director. Directors are responsible for the day to day oversight of the company’s operations. Duties of loyalty and good faith in favour of the company are imposed on directors, which means that directors are prohibited from acting in a manner that is adverse to the interests of the company and must take steps to ensure they govern the company in a reasonable and prudent manner. While directors’ have the power to make decisions on behalf of the company and the authority to bind the company to obligations, they also bear the burden of potential personal liability (their personal assets could be placed at risk) should they fail to adhere to their duties of loyal, good faith, and reasonable care. Certain laws also hold the directors of a company personally responsible for ensuring the company follows those laws, for example, directors are held personally responsible for a company’s failure to remit its taxes and may be help personally responsible for failing to pay employees wages. In British Columbia, the appointment of officers such as a company President, Secretary, CEO, CFO, or other position, is optional. However, like directors those who are appointed as officers are subject to duties of loyalty, good faith, and reasonable care to the company.

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Mandatory Corporate Records

Once incorporated companies must maintain a registered office and a records office in British Columbia. At the records office, the following documents must be kept:

1. Certificate of Incorporation (issued by the BC Registrar of Companies to confirm the existence of the company).
2. Notice of Articles (definitively confirm the directors and setting out the classes of shares the company is authorized to issue).
3. Articles (confirming the rules the company must follow in conducting its operations and confirming the rights and restrictions associated with each share class described by the Notice of Articles).
4. Central Securities Register (listing shareholders, share classes, and issuance dates).
5. Register of Directors (including names, addresses, and appointment dates);
6. Share certificates issued by the company.
7. All shareholder and director resolutions.
8. Copies of the company financial statements.
9. Copies of the company’s annual reports.

Certain other documents that are required to be kept at the records office may arise on a case by case basis but do not occur in all cases.

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These corporate records are the principal source determining who has ownership and control of the company. Business owners must therefore take care to ensure the records are prepared accurately at the time of incorporation, and to keep them up to date at all times during the life of the company. Failure to do so may result in disputes between shareholders, with third parties, or with regulatory authorities as to who is entitled to benefit from the ownership and control of the company, which disputes may require costly and time consuming litigation to resolve.

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Subject to certain exceptions companies incorporated in British Columbia must also maintain a “Transparency Register” listing all “significant individuals” having an interest in the company. The register must include the full legal name, date of birth, last known address, citizenship and residency status, the date the individual became or ceased to be significant, a description of how they qualify as a significant individual, and the steps taken to confirm the information. Access to the Transparency Register is restricted to directors and authorized government officials. There are significant fines and penalties that can be imposed on companies that fail to maintain a Transparency Register.

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Ownership of a Company

Ownership of a company is not as simple as owning some percentage of a company’s shares. The Notice of Articles and the Articles of a company must respectively set out the various classes of shares a company is authorized to issue to shareholders, and the rights and restrictions associated with each class of shares. Every company must have shares that are entitled to vote on matters related to the operations of the company, shares that are entitled to receive the profits of the company during its life, and shares that are entitled to the equity and assets upon liquidation of the company’s business, but the mix of rights attributed to each share class, and the number of available share classes, is at the company’s discretion.

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These principal rights, along with any additional rights or restrictions the incorporators of the company see fit to assign, may be combined and distributed amongst a company’s various share classes in whatever manner the incorporators deem fit. However, it is vital that the share classes described in the Notice of Articles and rights and restrictions assigned to each class by the Articles are internally consistent, and that the assigned rights and restrictions are set out in the Articles in a practical and coherent matter. Failure to ensure consistency between the Notice of Articles and the Articles, or to ensure the rights and restrictions assigned to each class of shares are set out in a practical and coherent manner, may result in confusion and dispute as to who validly owns the shares of the company and what rights each owner is entitled to with respect to the company. Every distribution or transfer of shares should be meticulously documented at the time the transaction occurs, to ensure that the agreed details of the transaction are recorded for reference should the shareholders or the directors of the company disagree as to the terms of transaction at a later date.

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Taxation of Companies

Companies are taxed as separate entities from their shareholders. Meaning they pay corporate income tax on their income, and shareholders are taxed personally when they receive dividends from the companies they own. However, there are mechanisms in under taxation legislation that attempt to minimize the impact of this double taxation, so that in effect the taxes paid by shareholders are roughly equal to the taxes that shareholders would have paid if they received the funds directly. It is vital that business owners retain an accountant to ensure that are able to minimize the excess tax paid when operating through a company.

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Shareholders’ Agreements

Incorporation and preparation of the records described above is generally all that is necessary to creating a company that is ready to conduct business. However, if the company will be owned by more than one person a Shareholders’ Agreement governing the relationship between each of the shareholders and the company is strongly recommended. The British Columbia Business Corporations Act offers little guidance or direction with respect to the resolution of disputes between shareholders or the appropriate governance of company operations. Therefore, a Shareholders’ Agreement is necessary to fill the gaps and enable disputes regarding the company to be resolved in an efficient manner. A Shareholders’ Agreement should address key issues such as who is entitled to sit on the board of directors for the company (and thereby have authority over the day to day operation of the company), the capital contributions required of each shareholder and how financing decisions will be made on a go forward basis, limits operational decision-making authority of the directors, the availability dispute resolution mechanisms, the procedures that must be followed if the shareholders want to sell their shares or have the company issue new shares to new or existing shareholders, as well as any other company specific matters or agreements that may arise between the shareholders.

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General Partnerships

Formation of General Partnerships

A general partnership involves two or more people carrying on business together with a view to profit. A general partnership can be formed without any formal registration or even any documentation. Under the British Columbia Partnership Act if two or more people carry on business together with a view to profit, they are deemed to have formed a partnership. Business operators must be wary of this deemed existence of a partnership, as the Partnership Act may, unknown to the partners, impose rights and obligations that do not align with their intentions. To avoid unwanted obligations and to ensure each partner receives the rights it was intended they receive, business operators carrying on business collectively should document the rights and obligations they are each entitled to in a partnership agreement.

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Notwithstanding the fact a general partnership can be formed without any documentation, if the business operates under a name other than the legal names of the partners the name must be registered with the BC Registrar of Companies. Additionally, if a partnership seeks to operate in certain more heavily regulated industries (e.g. trading, manufacturing, or mining), there is an obligation to file a registration statement with the BC Registrar of Companies.

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To register a business name, the partners must first submit a Name Request through BC Registries and Online Services. The name must be distinctive and not misleading or confusingly similar to existing partnership or company names. Once the name is approved, the partnership can be registered by submitting the appropriate registration documents to the BC Registrar of Companies. Nothing further is required to form a general partnership, but best practice is to document the rights and obligations of the partners in a partnership agreement.

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General Partnership Agreements

Although not legally required for the formation of a general partnership, it is strongly recommended that the partners enter into a written partnership agreement. This agreement should address key issues such as the nature of the business, the capital contributions of each partner and how other financing decisions will be made, the allocation of profits and losses, the authority of each partner to bind the business, operational decision-making procedures, dispute resolution mechanisms, and procedures for admitting new partners or dissolving the partnership.

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Liability of Partners

In a general partnership, each partner is jointly and severally liable for the debts and obligations of the partnership’s business. This means that a creditor may pursue any one partner for the full amount of a debt, regardless of which partner approved it and whether the other partners even had knowledge of the debt. This exposure to personal liability, and the lack of control over the debts and obligations for which a partner may become responsible, is one of the primary drawbacks of the general partnership structure.

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Taxation of Partnerships

General partnerships are generally treated as “flow-through” entities for tax purposes, meaning that the partnership itself does not pay income tax. Instead, income and losses are allocated to the partners, who report them on their personal tax returns. By allocating partnership income and losses to the individual partners, the partners may be able to gain a tax benefit by setting off losses from other business ventures against partnership income, or by setting off partnership losses to reduce taxable income the partners may have received from other ventures.

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A Note on Sole Proprietorships

Sole proprietorships are, in effect, general partnerships with only one partner. Like general partnerships, the proprietor in a sole proprietorship is personally liable for the debts and obligations arising from the business of the sole proprietorship. There is no documentation required to form a sole proprietorship, provided that if the business is conducted under a name that is not the legal name of the proprietor, then that business name must be reserved and registered with the BC Registrar of Companies, and a registration statement is required to be filed if the proprietorship is going to conduct business in certain heavily regulated industries. The conduct of any substantive business as a sole proprietor is not typically advantageous, so this article will not discuss sole proprietorships in any greater detail.

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Limited Partnerships

Structure and Formation of Limited Partnerships

A limited partnership is a business structure that includes at least one general partner and one or more limited partners. The general partner manages the business on behalf of the limited partnership and assumes unlimited liability for the debts and obligations of the business, while the limited partners contribute capital to the business and enjoy liability protection for their personal that’s that have not been contributed to the limited partnership, provided they do not participate in the management of the business.

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To form a limited partnership, the general partners must first reserve a business name through BC Registries and Online Services. The name must include the words “Limited Partnership” or the abbreviation “LP.” Once the name is approved, the general partners must file a certificate with the BC Registrar of Companies confirming the existence of the limited partnership and disclosing certain information about the limited partnership. The limited partners are not afforded liability protection until the certificate is filed and approved by the Registrar.

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Limited Partnership Agreements and Partnership Records

Limited partnerships must also have a written partnership agreement. The agreement should address the roles and responsibilities of each partner, the amount and form of capital contributions, the allocation of profits and losses, limits on the scope of the general partner’s decision-making authority, and the procedures for admitting new partners or dissolving the partnership, among other partnership specific details. At the limited partnership’s records office, the following records must be maintained: a copy of the limited partnership agreement and any amendments to same, a copy of the filed certificate and any amendments to it, and a register of limited partners. This register must include the full name and address of each limited partner, the amount and type of their contribution, and the date of their admission or withdrawal.

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Liability in Limited Partnerships

Limited partners are liable only to the extent of their capital contributions to the limited partnership, unless they take part in the control and management of the business. If a limited partner participates in management, they may lose their limited liability status and be treated as a general partner. Thus, it is often the case that the general partner in a limited partnership is a company that is controlled by the individuals who also control the limited partners (themselves usually companies as well) in the limited partnership. With this structure, the general partner’s decisions will be guided by individuals each of whom seek to act in the best interest of a limited partner, but by acting through the corporate general partner these individuals ensure that no limited partner is perceived taking over the management of the business.

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Taxation of Limited Partnerships

Like general partnerships, limited partnerships are not taxed as entities, income and losses passed through to the partners, who report it individually and the income and losses can be comingled with each partners income or losses from other business ventures to create tax benefits.

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Operational Considerations

After business operators have settled the business structure through which they intend to operate, and formation of the business structure has been completed they must turn their mind to the regulatory requirements imposed on operating businesses.

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Employment Matters

Regardless of business structure, businesses that employ employees must comply with the Employment Standards Act of BC, which sets out minimum standards for wages, hours of work, overtime pay, statutory holidays, vacation entitlements, and termination notice or pay in lieu, among other obligations intended to protect and benefit employees. Legislation and common law in British Columbia are very favourable to employees and create risk of significant liability for employers if they are found to be in contravention of the law in this area. Implementing, adhering to, and regularly reviewing and updating properly drafted employment agreements and company policies is the best way for a company to mitigate the risk of liability with respect to its employees.

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Human Rights Matters

In addition to employment standards, businesses must comply with the British Columbia Human Rights Code. This legislation prohibits discrimination in employment and the provision of services on the basis of protected characteristics such as race, gender, disability, age, religion, and sexual orientation. Under the Human Rights Code Employers have a duty to accommodate employees with disabilities to the point of undue hardship, which may include modifying work duties, schedules, or physical workspaces. Being so closely comingled with employment legislation, the best way for a company to minimize its risk of liability under human rights legislation is all implementing, adhering to, and regularly reviewing and updating its employment agreements and company policies.

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Occupational Health and Safety Standards

The law also imposes workplace safety standards that governed by WorkSafeBC under the Workers Compensation Act and the related Occupational Health and Safety Regulation. All employers with one or more workers must register with WorkSafeBC and pay insurance premiums. Employers are responsible for ensuring a safe and healthy work environment, which includes conducting risk assessments, implementing safety protocols, providing training and supervision, and reporting workplace injuries and incidents. A mandatory aspect of WorkSafe compliance is the implementation of a Bullying and Harassment policy, which often takes the form of a Workplace Conduct Policy. Employers should review the Workers Compensation Act , the Occupational Health and Safety Regulation, and WorkSafeBC’s related policies and bulletins to determine what aspects of these regulations apply to their business, and take steps to implement policies and procedures addressing each relevant aspect.

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Privacy Obligations

Privacy obligations are also critical, particularly for businesses that collect, use, or disclosure personal information about customers, employees, or clients. The Personal Information Protection Act (PIPA) requires businesses operating in British Columbia to obtain informed consent before collecting, using, or disclosing any individuals’ personal information, to use the information only for the purposes for which it was collected, and to implement reasonable security measures to protect it. Businesses must also have a privacy policy and a designated privacy officer, and they must respond to access and correction requests from individuals whose information they hold. It is strongly recommended that business owners take time to understand what constitutes “personal information” under PIPA and audit their business operations to determine how such information is collected, used, or disclosed. Only once this is understood can a business implement effective policies and security measures for managing the collection, use, and disclosure of that information.

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Taxation Authorities

Finally, most businesses must also register with appropriate taxation authorities, including the Canada Revenue Agency and the Ministry of Finance, and comply with tax remittance rules regarding the remittance of PST, GST, income tax, and other taxation requirements. Every business owner should retain a reliable accountant to assist them in effectively managing their tax obligations.

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The above considerations are by no means a comprehensive list, as businesses will bear industry, locational, and other business specific legal regulation and liability risks related to their operations. The above summary represents only a cursory review of some common examples of regulation that all businesses must investigate, understand, and comply with throughout the course of their operations.

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Conclusions

The process of structuring a business in British Columbia and implementing policies and procedures that govern its operations is not merely legal formality—these are strategic decision that shapes the business’s risk profile, tax obligations, governance structure, and long-term potential.

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General partnerships offer simplicity and flexibility but expose partners to unlimited personal liability. Limited partnerships provide a mechanism for passive investment with liability protection for limited partners, but they require careful adherence to statutory formalities to preserve that protection. Companies, while more complex and administratively demanding, offer the most robust legal framework. They provide limited liability to shareholders, perpetual existence, and access to tax planning and tax deferral strategies, succession planning methods, income splitting potential, as well as easier access to capital from third party investors. However, they also require strict compliance with corporate governance rules, record-keeping obligations, and ownership transparency requirements.

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Regardless of the structure chosen, all businesses must comply with a range of legal obligations under employment, privacy, human rights, occupational health and safety, and legislation, and may face additional regulatory burdens on an industry, locational or other basis. These obligations are not optional; policies and procedures for compliance must be integrated into the day-to-day operations of the business from the outset of its operations, and should be regularly reviewed and updated to ensure compliance is maintained as the business the regulatory environment within which it operates evolves.

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Entrepreneurs are strongly encouraged to seek legal and accounting advice when selecting and establishing a business structure and commencing business operations. Professional guidance can help ensure that the chosen structure aligns with the business’s goals, minimizes legal and financial risk, ensure regulatory compliance and sets the foundation for sustainable growth. With the right structure in place and a clear understanding of the associated responsibilities, business owners in British Columbia can move forward with confidence, knowing they have built their enterprise on a solid legal and operational foundation.

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The foregoing is not intended to be legal advice and should not be construed as such, it is merely legal information. Every business is unique and business operators should seek legal and accounting advice specific to their circumstances.

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On May 27, 2025, the federal government introduced a new GST rebate for first-time homebuyers, eliminating GST on new homes under $1 million. Homes priced between $1M and $1.5M will receive a partial rebate, phasing out as the price increases. For example, a $1.25M home qualifies for a 50% rebate, saving buyers up to $25,000.

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Eligible buyers must be Canadian citizens or permanent residents over 18, who haven’t owned a home in the past 4 years. The rebate applies to new homes purchased from builders, owner-built homes, and qualifying cooperative housing units—provided the home becomes the buyer’s primary residence and the buyer occupies it. Key eligibility dates are between May 27, 2025 and 2031, with construction required to finish before 2036.

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The rebate can’t be claimed more than once per lifetime or if a spouse has already used it. It also doesn’t apply to homes purchased under contracts signed before May 27, 2025, or to co-op units already eligible for a full rental rebate.

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Industry reaction is mixed. While developers and industry associations welcome the rebate, they argue it doesn’t go far enough. Many urge broader eligibility to improve affordability and further stimulate construction of new housing supply.

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As part of my estate planning practice, I often draft wills that include testamentary trusts for one or more of the will-maker’s beneficiaries. The use of testamentary trusts isn’t novel but there’s been an increase in the number of inquiries I receive on the topic. To clear up some of the confusion, let me answer some of the most popular questions I receive:

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1. My children/grandchildren/godchildren/nieces or nephews are too young to control an inheritance on their own, is there anything I can do?
2. I’m divorced and I don’t want my ex to have any influence/control over my child’s inheritance, is there anything I can do?
3. I’m not sure the beneficiary can handle an infusion of cash, is there anything I can do?
4. I’d like the inheritance to be received at certain intervals, is there anything I can do?
5. I have a specific purpose in mind for this gift, is there anything I can do?

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The answer to all these questions is yes, testamentary trusts. It’s a misconception that trusts are for the ultra-rich. The popularization of trusts funds in US dramas hasn’t helped with the confusion. Trusts can be for everyone!

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A trust is simply a relationship among the settlor (the person that creates the trust), the trustee (the person that manages the trust) and the beneficiaries (the persons that benefit from the trust). Trusts come in all different shapes and sizes. And testamentary trusts, being a trust that takes effect on death, is a type of a trust. It’s a relatively simple structure to a knowledgeable lawyer but outside the scope of a notary’s practice. A testamentary trust is often no more than a page long in a Will and can be used to address a myriad of concerns, including those articulated above.

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Most of the wills I draft for will-maker’s include one or more testamentary trusts. The terms of the testamentary trusts are up to the will-maker. How much cash will be set aside? Up to the will-maker. Who will be the trustee and in charge of the fund? Whomever the will-maker decides. When does the beneficiary ultimately take control of their inheritance? Up to the will-maker. Testamentary trusts give the will-maker the chance to control how and when an inheritance is received. This often gives clients of mine much more peace than “hoping for the best”.

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If your estate plan could benefit from the use of testamentary trusts (and it probably could), a skilled wills, estates and trusts lawyer can help. An experienced lawyer will help craft a will that includes your intended beneficiaries while also addressing your major concerns.

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In today’s economy, shared ownership of a residential property may be the only way for some people to get their foot into the real estate market. Relationships of various nature may decide to purchase property together such as siblings, friends, parent-child, and business partners. Usually, the decision to purchase a property occurs when relationships are at their peak, but what happens when there is a breakdown in the relationship?

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We are seeing an increasing number of cases where two individuals purchase a property together with the intention to share and live in the property, but then over time the relationship begins to sour and eventually one of the co-owners moves out. At that point, either of the co-owners can apply pursuant to the Partition of Property Act, RSBC 1996, c 347 (the “Act”) to have the property sold and the net sale proceeds divided between the co-owners pursuant to their entitlement.

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The core purpose of the Act is to allow co-owners to apply to the court to physically divide (partition) or sell the shared property when owners can’t agree amongst themselves. Today, a sale of the property is the more common remedy than partition under the Act.

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Section 2 of the Act expressly states that an owner may be compelled to sell the property against their will. Section 6 of the Act goes one step further and says a co-owner that owns 50% or more of the property can apply to the court to have the property sold and the court must order the sale of the property unless there is good reason not to.

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The Act also provides recourse for co-owners that own less than 50% of the Property. In these cases, the court will give the co-owner that has a higher interest in the property a limited right of first refusal – giving them the option to buy out the share of the party requesting the sale.

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Where there is no issue concerning the co-owners’ interest in the property, the court will order the sale of the property unless the responding co-owner can demonstrate that there is good reason not to order the sale. Courts in British Columbia have outlined that personal inconvenience, “emotional attachment”, inability to buy a comparable property do not constitute good enough reasons to oppose a sale. On the other hand, serious hardship, lack of good faith, and there being an agreement in place between the parties restricting the sale may be sufficient for the courts to not order the sale.

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In addition to ordering the sale of the property, the Act provides the courts with the ability to make sure the profits from the sale are divided fairly. As such, both co-owners will need to present evidence to account for any expenses and revenues associated with owning the Property and advocate for how the net sale proceeds need to be adjusted accordingly.  

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Co-owning property can be a practical or profitable arrangement, but it can also lead to conflict – especially where personal or financial circumstances change. If you are in a co-ownership situation and are facing disputes over the use, division, or sale of the property, it’s wise to seek legal advice. A lawyer experienced in property law can help you understand your rights under the Act and guide you through the process of applying to the court if needed.

If you own shares of a company in B.C., note that the B.C. government will launch a public transparency register by late spring or early summer 2025.

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Since October 2020, private B.C. companies have been required to maintain internal transparency registers disclosing individuals with substantial control or influence. With the enactment of new laws, this information will soon be accessible to the public.

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Starting as of spring 2025, companies—including limited, unlimited liability, community contribution, and benefit companies—must file their transparency register information online. These filings are due within 6 months of incorporation, annually, and within 15 days of any changes.

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The updated rules also shorten the time to update internal registers from 30 to 15 days upon discovering new information. Registers must now include additional details such as social insurance or individual tax numbers and, if applicable, statements of incapacity.

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It remains unclear whether the new registry will allow public searches by individual name or only by company name. The federal registry restricts individual-name searches due to privacy concerns; B.C.'s approach is still to be confirmed.

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Businesses should ensure compliance with the upcoming filing and disclosure obligations in order to avoid penalties or fines.

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If you are a business owner with any questions related to the new transparency register requirements, reach out to Aman Bindra at [email protected] or 604-591-7321 today.