- A statutory declaration is a written statement of fact, sworn or affirmed before someone authorized to take it (such as a lawyer, notary, or commissioner for taking affidavits).
- The exact mix depends on how the transaction is structured and what the buyer's lawyer considers material for that particular business.
- Ontario's old Bulk Sales Act — which once required sellers to give notice to creditors before an asset sale — was repealed in 2017.
Among the stack of documents signed at an Ontario business sale closing, statutory declarations look deceptively simple — usually a page or two, signed in front of a commissioner for taking affidavits. But because they're sworn statements made under oath, they carry a weight that ordinary contract terms don't. A seller who signs one is personally attesting, on the record, that specific facts are true.
Buyers ask for them because a signature on a sworn document tends to concentrate the mind in a way a purchase agreement clause sometimes doesn't. Here's what these declarations typically cover, why they still matter, and how they fit alongside the rest of the closing documents.
What a Statutory Declaration Actually Is
A statutory declaration is a written statement of fact, sworn or affirmed before someone authorized to take it (such as a lawyer, notary, or commissioner for taking affidavits). It doesn't create new legal obligations on its own the way a contract clause does — instead, it's a formal, sworn confirmation of facts the buyer is relying on to close the deal.
Common Declarations at an Ontario Business Sale Closing
| Declaration | What It Typically Confirms | Why the Buyer Wants It |
|---|---|---|
| Solvency declaration | The seller is not insolvent and isn't aware of any bankruptcy or insolvency proceedings affecting the business | Protects the buyer against a sale being unwound as a fraudulent conveyance or preference if the seller was actually insolvent |
| No undisclosed creditors | There are no material unpaid trade creditors, liens, or claims beyond what's been disclosed | Fills the gap left by Ontario's repealed bulk-sales regime — see below |
| No undisclosed litigation | There is no pending or threatened litigation against the business beyond what's already disclosed | Confirms the disclosure schedule is complete on this specific point |
| Corporate/business name compliance | The business isn't operating under any name that isn't properly registered | Ties to registration requirements under the Business Names Act |
| Bring-down of representations | The representations made earlier in the purchase agreement remain true as of closing | Catches any change in circumstances between signing and closing |
Not every deal uses all of these, and some purchase agreements fold similar confirmations into a bring-down certificate rather than a separate sworn declaration. The exact mix depends on how the transaction is structured and what the buyer's lawyer considers material for that particular business.
Why Declarations Still Matter Since the Bulk Sales Act Was Repealed
Ontario's old Bulk Sales Act — which once required sellers to give notice to creditors before an asset sale — was repealed in 2017. There is no equivalent statutory notice regime today. That gap doesn't mean creditor risk disappeared; it means buyers now protect themselves through contractual tools instead of a government-mandated process. A sworn declaration that there are no undisclosed creditors is one of the more direct ways buyers fill that gap — it puts the seller's personal attestation on record about exactly the kind of risk the old statute used to address procedurally.
How Declarations Differ from Representations and Warranties
It's worth understanding the distinction rather than treating these as interchangeable:
- Representations and warranties are contractual statements made in the purchase agreement itself, and a breach is generally addressed through the agreement's indemnity mechanism.
- Statutory declarations are sworn statements made outside the contract, before someone authorized to take them, and carry the separate legal consequences that attach to swearing a false statement.
Buyers often want both on the same point — a representation in the agreement and a sworn declaration at closing — because they serve slightly different purposes and create different kinds of exposure if the statement turns out to be false.
Getting Ready to Sign
- [ ] Read each declaration carefully before signing — it's a sworn statement, not a formality to skim past.
- [ ] Flag anything you're not fully certain is accurate before closing, rather than after you've signed.
- [ ] Confirm which declarations your specific deal actually requires — not every business sale uses the same set.
- [ ] Understand that a declaration is signed personally, and its consequences are personal to you, separate from the corporation's obligations under the purchase agreement.
- [ ] Ask your lawyer to explain any declaration wording you don't fully understand before it's commissioned.
Frequently asked questions
What happens if a statutory declaration turns out to be false?
Swearing a false statutory declaration carries serious legal consequences that go beyond an ordinary breach of contract, because it's a sworn statement made under oath. A buyer who relied on a false declaration may also have separate claims for breach of the purchase agreement, depending on how the deal was structured.
Do buyers sign statutory declarations too, or only sellers?
Most declarations at a business sale closing are given by the seller, since they typically relate to facts about the business's history that the seller is best positioned to know. A buyer may still be asked to confirm certain facts, such as the source of funds, depending on the transaction.
Is a statutory declaration the same as a certificate signed at closing?
Not quite. A certificate (such as a bring-down certificate or an officer's certificate of corporate authority) confirms facts as part of the closing mechanics, but isn't necessarily sworn before a commissioner. A statutory declaration specifically involves an oath or affirmation, which carries its own distinct legal weight.
Can a statutory declaration replace proper due diligence?
No. A declaration is a useful additional layer of accountability, but it doesn't substitute for a buyer actually reviewing the business's records, contracts, and financials before closing. Buyers who skip due diligence and rely solely on declarations are taking on more risk than the declaration alone can realistically cover.
This is a business purchase or sale question
Start a file online — flat, published fees, reviewed by a licensed Ontario lawyer before a dollar is owed.