- Start with a complete inventory, not just the obvious ones.
- Once you know what licences exist, confirm each one is currently valid — not expired, suspended, or under active investigation.
- Some regulatory regimes allow a formal transfer application; others require the buyer to apply from scratch, as if the business had never held the licence before; and some licences are…
Many businesses in Ontario can't legally operate without a licence, registration, or permit of some kind — a restaurant needs a food premises permit, a salon may need a personal service settings licence, a mover needs specific municipal or provincial authorizations, and countless other trades and professions have their own regulator. If you're buying one of these businesses, you're not just buying its assets or shares — you're buying its right (or lack of one) to keep operating.
Too many buyers assume that if the business is running today, its licences must be in order and will simply "come with" the deal. That assumption can be expensive to correct after closing. Verifying business licences and permits before buying is a distinct due diligence exercise, separate from — but just as important as — reviewing the financial statements.
This article sets out a practical process for confirming a target business's licences are real, current, and actually transferable to you.
Step 1: Identify Every Licence and Permit the Business Actually Operates Under
Start with a complete inventory, not just the obvious ones. Ask the seller directly, and cross-check with:
- Signage or certificates physically posted at the business premises
- The business's own website, invoices, and marketing materials
- Industry knowledge of what's typically required for that type of business
- Any regulator, association, or governing body the seller mentions during due diligence conversations
Regulated sectors often layer municipal, provincial, and sometimes federal requirements on top of each other, so don't stop at the first licence you find.
Step 2: Confirm Status and Good Standing
Once you know what licences exist, confirm each one is currently valid — not expired, suspended, or under active investigation. Ask the seller for:
- Copies of the current licence or permit certificates
- Any renewal or inspection correspondence from the past several years
- Confirmation of no outstanding compliance orders or complaints
It's also standard practice to pull a corporate profile report — and, where warranted, a certificate of status — for the target corporation from the Ontario Business Registry. This confirms the corporation itself exists, is in good standing, and matches what the seller has represented. The province charges a modest fee for each of these documents (as of mid-2026 — verify the current amount before relying on it), and your lawyer can typically obtain them as a routine part of closing preparation.
Step 3: Determine Whether the Licence Is Actually Transferable
This is the step buyers most often skip — and the one that matters most. Not every licence moves with a sale. Some regulatory regimes allow a formal transfer application; others require the buyer to apply from scratch, as if the business had never held the licence before; and some licences are personal to an individual (tied to a specific person's qualifications or good character) and simply cannot transfer to a new owner at all.
| Licence Category | Typical Treatment | What to Check |
|---|---|---|
| Tied to the business premises | Often reissued to the new operator, sometimes with a streamlined process | Whether the regulator treats it as transferable or requires a fresh application |
| Tied to the corporate entity (share sale) | May continue automatically since the licensed entity hasn't changed | Whether the regulator still requires notice of the change in ownership |
| Tied to an individual's personal qualifications | Generally does not transfer | Whether the buyer (or a manager) can independently qualify |
| Subject to regulator discretion or a fitness/character test | Transfer or reissue is not guaranteed | Timing — apply early, before you're relying on the licence to operate |
Step 4: Build the Result Into Your Purchase Agreement
Once you know what's transferable and what isn't, don't leave the outcome to chance. Purchase agreements commonly address licensing through:
- A seller representation and warranty that all necessary licences are valid, in good standing, and disclosed
- A closing condition that key licences be transferred, reissued, or newly approved before the deal completes
- An indemnity allocating the risk if a licence turns out to be invalid, restricted, or non-transferable after closing
Frequently asked questions
What happens if a key licence can't be transferred to me?
It depends on the licence and the regulator's process — sometimes the buyer applies fresh and there's a gap in authorization to plan around, and sometimes the business simply can't operate the same way under new ownership without a new approval. This needs to be identified and addressed before closing, not discovered after.
Does a share purchase avoid licence transfer issues?
Often, yes — since the licensed corporate entity doesn't change in a share purchase. But some regulators still require notice of a change in control or ownership, so don't assume a share deal means zero licensing steps.
Who should I ask to confirm a licence's status — the seller or the regulator?
Both. The seller's documents are your starting point, but verifying directly with the relevant municipal or provincial regulator (or having your lawyer do so) confirms the licence is actually current and not misrepresented.
Is a certificate of status the same as confirming a business licence is valid?
No. A certificate of status confirms the corporation itself exists and is in good standing with the province — it says nothing about whether the business holds the specific operating licences its industry requires. You need both checks.
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