Mergers and Acquisitions: Acquiring a Canadian Company is a general overview of the principal securities, tax, competition, foreign investment, labour relations, employment and pensions considerations that would be applicable in the acquisition of a Canadian business.

1. Fraser Milner Casgrain llp
LEGAL GUIDE
Mergers and Acquisitions
in Canada

2. Mergers and Acquisitions
in Canada
Fraser Milner Casgrain llp
LEGAL GUIDE

4. INTRODUCTION 1
OVERVIEW OF CANADIAN SECURITIES LEGISLATION 2
Introduction 2
Overview of Canadian Securities Legislation 2
Take-Oer Bids
v 3
Advantages and Disadvantages 3
Commencing a Take- Oer Bid
v 4
Acquisitions Outside of the Bid 4
Request for List of Security Holders 6
Prohibition Against Collateral Agreements 7
Defensive Tactics 7
Obtaining the Balance of the Shares 11
Plan of Arrangement 13
Advantages and Disadvantages 13
Exchangeable Share Transactions 14
Conclusion 16
TAX CONSIDERATIONS – GENERAL OVERVIEW OF CANADIAN INCOME TAX PRINCIPLES 17
Introduction 17
Federal Income Taxes 17
Provincial Income Taxes 17
Commodity Taxes and Payroll Taxes 18
Federal and Provincial Income Tax Rates 18
Withholding Taxes 19
Branch Taxes 19
Capital Taxes 20
Transfer Pricing Rules 20
Canada-U. S. Tax Treaty 22
Treaty Relief 22
Business Prots 22
Dividends 23
Interest 23
Branch Tax Relief 23
Capital Gains 23
Treaty Entitlement 24
“S” Corporation 24
U. S. Limited Liability Company 24
Limitation on Benets Provision 25
Structuring Considerations 25
Canadian Subsidiary 25
Branch 26

5. – MERGER NOTIFICATION AND REVIEW 35
Introduction 35
Overview 35
Administration and Enforcement 35
Notication 36
Substantive Merger Review under the Act 38
Merger Assessment yb the Commissioner 39
Merger Enforcement Guidelines 39
Substantial Lessening of Competition 40
Market Denition 40
Safe Harbours 40
Vertical Mergers 41
Ef ciencies 41
Conclusion 42
FOREIGN INVESTMENT NOTIFICATION AND APPROVAL UNDER THE INVESTMENT CANADA ACT 43
Introduction 43
Notication and Review 43
Thresholds for Review 44
Cultural Businesses 44
Applications for Review and the Review Process 45
Net Benet to Canada Test 46
Net Benet - State-owned enterprises 46
National Security Review 46
Undertakings and Progress Reports 47

6. LABOUR RELATIONS AND EMPLOYMENT CONSIDERATIONS 49
Introduction 49
Background Information 49
Employment Agreements 49
Termination of Employment 49
Acquisition of Shares 51
Due Diligence 51
Representations and Warranties 52
Asset Purchase 53
The Unionized Workplace 54
Employees on Leave of Absence 54
Amalgamations 55
Data Privacy 55
Conclusion 56
PENSION AND BENEFITS CONSIDERATIONS 57
Introduction 57
Registered Pension Plans - General Statutory Frameork w 57
Types of Pension Plans 57
Impact of Pension Legislation on Corporate Transactions 59
Impact of Labour and Employment Law on Pension and Benets Issues 60
Collective Agreement 60
No Collective Agreement 1
6
Due Diligence 62
Representations and Warranties 63
Purchase or Sale of a Business 63
Asset Purchase 63
Analysis of Options 64
No Successor Plan Option 64
Successor Plan Option - No Transfer 64
Successor Plan Option - With Transfer 65
Plan Assignment Option 76
Share Purchase 7 6
Related Companies Participate in Target Companys Pension Plan
’ 7 6
Assets of the Target Companys Pension Plan Participate in a Master Trust
’ 68
Target Company is a Participating Employer in the Pension Plan of a Related Company 68
Purchaser Requires Termination of Pension Plan 68
Mergers 68
Other Benets/Costs Issues of Note 9
6
Retiree Benets 9 6

7. ABOUT FMC 71
Our Approach 71
Experience Worth Pursuing 71
Contact Us 71