- A licence or permit isn't property in the ordinary sense — it's permission granted by a government body to a specific legal or natural person, often tied to particular premises,…
- In a share sale, the corporation that holds the licence doesn't change — only its shareholders do.
- In an asset sale, the buyer is a different legal person or entity purchasing specific assets — not the entity that holds the existing licences.
When you buy or sell a business in Ontario, the purchase agreement usually gets most of the attention — but the licences and permits that let the business actually operate deserve just as much planning. A restaurant needs its food premises approval, a salon needs its operator registrations, a mover needs vehicle-for-hire permits, and almost every business needs some form of municipal licence just to open its doors. None of these move to a new owner automatically just because a deal closes.
The single biggest factor in transferring a business licence to a new owner is whether the sale is structured as a share purchase or an asset purchase. That one choice largely decides whether existing licences simply continue in the background, or whether the buyer needs to start a fresh application before day one of ownership.
This article walks through how licences and permits generally behave under each structure, which categories tend to be the most work, and how to build a checklist so nothing gets missed before closing.
Why a Licence Isn't Just Another Asset
A licence or permit isn't property in the ordinary sense — it's permission granted by a government body to a specific legal or natural person, often tied to particular premises, equipment, or personal qualifications, after that person met eligibility criteria set by the regulator. Unlike a piece of equipment or a customer list, a licence holder generally can't simply hand it to someone else the way ownership of a physical asset changes hands. Whether it continues, and how, depends on who the "someone else" legally is.
Share Sales: Licences Generally Continue
In a share sale, the corporation that holds the licence doesn't change — only its shareholders do. Since the legal license holder is unchanged, most licences issued to that corporation should remain valid without a fresh application. That said, don't assume this covers everything:
- Some licences (liquor licensing is a well-known example) require notice or approval when the people who own or control the licensed business change, even though the corporate entity technically stays the same.
- As part of due diligence, it's standard practice to confirm the corporation is in good standing — a profile report or certificate of status from the Ontario Business Registry is the usual way to verify this before closing.
- Always read each licence's own terms; some include change-of-control language that a general "share sales are simpler" assumption would miss.
Asset Sales: Plan for a Fresh Application
In an asset sale, the buyer is a different legal person or entity purchasing specific assets — not the entity that holds the existing licences. Most regulators won't let a licence simply follow the business into new hands; the buyer generally has to apply as a new applicant and meet the same eligibility requirements anyone else would. A handful of licence categories do offer a more formal transfer or reissuance process that's less redundant than starting from zero, but this varies by regulator and shouldn't be assumed without checking.
Because licensing timelines are outside your control, this is one of the first things to sort out in due diligence — well before you're locking in a closing date.
Common Licence and Permit Categories to Check
| Licence category | Share sale | Asset sale |
|---|---|---|
| Municipal business licence (e.g., second-hand goods, mobile vending, personal services) | Generally continues under the existing corporate holder | New application generally required |
| Sector-specific regulatory licence (e.g., liquor, food premises, cannabis retail) | Often continues, but ownership/control changes may need to be reported | New application or registration generally required |
| Environmental compliance approvals | Generally continues with the corporate holder | Often needs a new approval or an amendment |
| Professional or trade licence tied to an individual | Stays with the licensed individual, not the corporation | Stays with the licensed individual, not the corporation |
That last row matters regardless of deal structure — a licence tied to a person's own qualifications doesn't move with a business sale at all. If the buyer isn't personally licensed, they'll need to arrange for a qualified individual however the specific regulator requires.
Building Your Licence Transfer Checklist
- [ ] Inventory every licence and permit the business currently holds
- [ ] Confirm which government body or regulator issued each one
- [ ] Check each licence for change-of-control, notice, or assignment language
- [ ] For an asset sale, start new applications as early as possible rather than after closing
- [ ] Confirm the corporation's good standing through the Ontario Business Registry if the deal is a share sale
- [ ] Make required licence approvals a closing condition so the deal can't close before they're in place
Frequently asked questions
Can a buyer keep operating under the seller's licence while a new application is pending?
Generally, no — this depends entirely on the specific regulator and licence category, and operating without a required licence can expose the buyer to penalties. Confirm the regulator's own transition rules directly rather than assuming continuity is automatic.
What happens if closing occurs before a needed licence is approved?
This is a real risk, particularly in asset sales. It's why purchase agreements often make specific licence approvals a condition precedent to closing, or hold back part of the purchase price until the buyer can show proof of the new licence.
Does a share sale mean we don't need to think about licences at all?
Not entirely. The legal holder doesn't change, but some regulators still want notice when the people who own or control a licensed business change, and individual licence terms can vary. Check each licence rather than assuming automatic continuity across the board.
Do professional licences, like a contractor's or a health practitioner's, transfer with the business?
No. Licences tied to a person's own qualifications stay with that individual no matter how the deal is structured. If the buyer doesn't personally hold the required licence, the business will need a qualified individual in place through whatever route the regulator allows.
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