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Mergers and acquisitions are important processes in the Canadian economy, allowing companies to expand across borders, take advantage of new opportunities, and capture global talent. However, M&As can also have serious immigration implications in the True North. Whether you are an investor, a business owner, an employee, or an executive, it makes sense to understand these implications before proceeding with mergers or acquisitions. Schedule your conversation with a Canadian business immigration lawyer today.
Many Visa Programs are Only Valid if the Employing Company is Canadian
Many visa programs in Canada are valid only if the sponsored employee is working for a “Canadian” company. These programs may include the Temporary Foreign Worker Program (TFWP), the Global Talent Stream (GTS), the Start-Up Visa Program, and various Provincial Nominee Programs (PNPs).
A merger or acquisition could eliminate a company’s “Canadian” status. For example, an American company might acquire a Canadian company. After the acquisition is complete, existing foreign workers at the Canadian company may lose the right to live and work in Canada. This is because the conditions of their visas specifically require them to work for Canadian companies.
A foreign company that acquires a Canadian company becomes responsible for ensuring its workers retain their legal status. If a foreign company acquires a Canadian company and fails to address these emerging issues, it could face serious financial penalties for continuing to employ workers who are not permitted to work in Canada. According to some sources, these penalties may be as high as $100,000 CAD per violation. For a company that hires thousands of foreign workers, these penalties can be incredibly costly.
Immigration issues are therefore an important consideration during the due diligence stage of a merger or acquisition. Company leaders who believe that this might be an issue may want to consult with experienced Canadian immigration lawyers before completing their transactions. An experienced lawyer can assess the applicable immigration concerns and determine appropriate courses of action.
In preparation for these discussions, a company that plans to acquire a Canadian company may wish to request relevant information about the foreign workers. This might include a list of all foreign workers, copies of existing work permits, and copies of past IRCC audits.
What is the Definition of a “Canadian Company” Under Immigration Law?
Even if a Canadian company is “owned” by a foreign company after an acquisition, it may still qualify as a “Canadian company” under Canadian immigration law. As long as the Canadian branch or subsidiary has a valid legal relationship with its foreign parent company, it may retain its “Canadian” status.
If this is the case, existing work permits may not be drastically affected by the acquisition. However, Canadian immigration authorities are wary of Canadian “shell companies” that are Canadian in name only. If the Canadian company uses a Canadian mailing address but has no physical presence in Canada, it may lose its Canadian status.
Acquisitions and Mergers May Trigger Intra-Company Transfers
Mergers and acquisitions may allow or necessitate intra-company transfers. If a foreign company acquires or merges with a Canadian company, the foreign company may decide to transfer its existing employees to Canada. This may be necessary to guide the Canadian “side” of the company, particularly in the case of acquisitions. The Canadian acquiree may require guidance and close management to ensure it aligns with the policies and overall mission of the foreign “parent company.”
To ensure this alignment takes place, it makes sense to choose a trust, high-level employee, or manager who understands the core ethos and guiding mission of the parent company. Alternatively, the Canadian acquiree may require different types of guidance from non-leaders. For example, the Canadian company may need to learn trade secrets or confidential techniques that can only be described in-person by a knowledgeable, skilled, or specialized employee from the foreign country. Sometimes, trusted employees with highly technical knowledge may need to teach Canadian employees how to use, build, or develop advanced technology.
In Canada, the Intra-Company Transferee (ITC) program facilitates these transfers of foreign employees to Canada. As long as the employee you want to send to Canada has at least one year of full-time experience at your company, they should be able to gain a Canadian visa relatively easily. You must send an employee who has senior managerial experience or highly specialized knowledge. Alternatively, you may send an executive from your corporation. You may not use the ITC to send average or unskilled workers to Canada.
Of course, the same employee transfers may occur in the opposite direction. For example, a Canadian company might acquire a foreign company. In this situation, the Canadian company may need to send its Canadian employees, managers, and business leaders to the new foreign subsidiary or “branch” in order to ensure the same level of alignment and interoperability. In this situation, the Canadian company must familiarize itself with the specific immigration laws in the country of the acquiree.
For example, the United States offers the L-1 visa program ot multinational companies that need to transfer foreign workers to American subsidiaries or branches. This visa program allows Canadian workers to relocate to the United States and remain in the country for years while working at the newly acquired American branch. American immigration authorities make this program even more attractive for Canadian workers, giving them the opportunity to simply present their L-1 visa application to customs officials at their ports of entry. This could lead to instant approval without long wait times.
Can a Canadian Business Immigration Lawyer Help Me?
A Canadian business immigration lawyer may be able to help if you want to understand the immigration implications of mergers and acquisitions. While online research is certainly a step in the right direction, these implications vary greatly depending on the unique circumstances of the businesses involved. The implications also depend on whether you are an investor, employee, business owner, or someone else involved in this business transaction. Ackah Business Immigration Law can provide you with the immigration guidance you need during your acquisition or merger. Contact us at (587) 801-4837 for a continued conversation, or reach out online.
