What are the steps to buying a business in Manitoba?
This answer covers the law of Manitoba.
Buying a business in Manitoba generally runs from finding a target, to an offer, due diligence, a purchase agreement and closing, and the main legal choice is whether you buy assets or shares. If an asset deal is a sale in bulk, such as business assets sold as the seller stops carrying on the business, get the seller's duplicate bulk sale certificate, because a buyer without it can be liable for the seller's tax debt as at the date of sale.
During due diligence, run a Personal Property Registry search against the seller's exact legal name, since any person may request a search by debtor name. The Manitoba Companies Office publishes instructions for corporate searches and file summaries. A seller company selling all or substantially all its property needs shareholder approval by special resolution. Employees' service carries over to an asset buyer for minimum standards.
Buyer and seller may jointly elect on Form GST44 to pay no GST/HST if the buyer acquires at least 90% of the property needed to carry on the business, though conditions apply and some items stay taxable. How you allocate the price also matters for tax. Larger deals and foreign buyers can face extra filings, so ask a lawyer early.
Key takeaways
- The main legal choice is whether you buy the business's assets or the corporation's shares, because different rules apply to each.
- In a sale in bulk, get the seller's duplicate bulk sale certificate, or you can be liable for the seller's tax debt as at the date of sale.
- Do your due diligence before signing, including a Personal Property Registry search under the seller's exact legal name.
- Ask about the GST44 election and the price allocation before closing, since both affect your tax.