Corporate Acquisitions, Restructurings and Changes – Immigration Implications for Biotech Companies

Biotech companies in Canada are often involved in acquisitions, mergers and other corporate restructurings. Where such companies employ temporary foreign workers (TFWs) in Canada, immigration and work permit implications must be assessed whenever such changes are contemplated.

Corporate immigration expertise will be needed to avoid issues and should be part of the due diligence process. This article will highlight key considerations.

Corporate Changes and Restructurings: Immigration Considerations

Canada’s immigration department, IRCC, provides a guideline for mergers, acquisitions and company changes. The guideline should be reviewed in advance of any changes: IRCC Guidelines on Employer Restructurings and Name Changes.

The guideline sets out when a new LMIA (Labour Market Impact Assessment) or work permit may be need. The rules apply to employer-specific work permits under both the LMIA regime and under LMIA-exempt work permit categories such as the intra-company transferee category or NAFTA. The guideline does not affect foreign workers who hold open work permits (i.e. work permits that do not name a specific employer, such as post-graduate work permits).

If the legal entity is not changing (for example in a share purchase scenario) nothing will need to be done as long as the TFW’s terms of employment remain the same after the acquisition and if the underlying eligibility for the work permit category remains in place.

In an asset purchase scenario, the legal entity employing the TFW changes. Whether or not a new LMIA or a new work permit is required will depend on applying the “successor in interest” definition.

Per the guideline: “To establish a successor in interest, the successor entity must demonstrate that it has substantially assumed the interests and obligations, assets and liabilities of the original owner and that it continues to operate the same type of business as the original owner.” If it is a successor in interest scenario, and the terms of employment of the TFW are not changing, a new LMIA or work permit will not usually be required per the IRCC guidelines.

Where the TFW’s terms of employment or position will change a new work permit may be needed.

Failure to assess the situation and action any necessary LMIA or work permit changes will make the acquiring company non-compliant under Canada’s immigration legislation and under the employer compliance regime. It could also jeopardize the legal status of foreign workers.

The acquirer, if it is inheriting TFWs or taking over the employment of TFWs in Canada, will assume obligations under IRPA’s employer compliance regime.

The compliance conditions imposed by IRPA include the following: “The employer must provide the foreign worker with employment in the same occupation as that set out in the offer of employment and with wages and working conditions that are substantially the same as, but not less favourable than, those in the same offer”. Therefore, changing remuneration or the terms of employment before obtaining a new work permit may make an employer non-compliant.

Other employer conditions and obligations are set out at this IRCC website: Employer Compliance Conditions and Inspections. The acquiring entity must be aware of its obligations and should ensure that it is not inheriting any non-compliance problems from the target company.

Due Diligence Considerations

In terms of other due diligence considerations, set out below is a non-exhaustive list that companies and their corporate counsel may need to consider if TFWs are involved:

  • Are any TFWs in the target company properly authorized to work in Canada in the positions they hold?
  • Will the TFWs’ employer of record or any terms of employment change? If so will a new LMIA and/or work permit be needed?
  • Will the change make any TFWs ineligible for the current category of work permit held?
  • Is the target company compliant under IRPA’s employer compliance regime?
  • Has the target failed a compliance inspection under IRPA or is there a pending inspection?
  • Is the target compliant with any applicable provincial foreign worker protection legislation?
  • Will the change negatively affect any pending immigration applications, such as a provincial nominee based permanent resident application?
  • Does the target have an IRCC Employer Portal account? If the legal entity/CRA number of the employer will remain the same, the Employer Portal user name, password and security questions will be needed by the acquirer to access the Employer Portal and in order to be able to apply for future LMIA-exempt work permits.

Conclusion

Corporate changes or acquisitions will affect employer compliance obligations where the entities involved employ foreign nationals. However, proactive recognition and assessment of these issues will mitigate the risks. Engaging corporate immigration counsel well in advance of any changes to corporate structure will help ensure ongoing compliance.

NOT LEGAL ADVICE. This is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information.


About the author

Image of Bill MacGregor of Gowling WLG Canada LLPBill MacGregor is a partner and leads the Immigration Group at Gowling WLG. His practice focuses exclusively on corporate and business immigration, delivering solutions while ensuring that employers remain compliant with immigration rules and regulations.  Bill has years of experience advising clients on all aspects of corporate immigration and developing immigration strategies.  He assists employers to obtain work permits for foreign national hires or transfers, and to transition work permit holders to permanent residents.

Bill MacGregor of Gowling WLG Canada LLP
bill.macgregor@gowlingwlg.com
519-575-7528

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