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The Intersection of Immigration and M&A Law

Immigration Requirements after a Completed Merger, Acquisition or Corporate Restructuring

In our previous newsletter, we outlined the regulatory amendments and the risks associated with overlooking immigration in an M&A due diligence process. In this newsletter, we will continue our review of the impact of immigration regulations on M&A transactions and corporate restructuring by outlining the necessary steps to be taken during the transition period once the M&A transaction is complete.

There are two types of temporary foreign workers that are significantly impacted by any type of corporate restructuring:

  1. Temporary foreign workers employed pursuant to a Labour Market Impact Assessment (“LMIA”) or Labour Market Opinion (“LMO”); and
  2. Intra-company Transferees.

Temporary Foreign Workers under an LMIA/LMO

An LMIA/LMO is issued to an employer directly, not to a temporary foreign worker. While an LMIA/LMO may be sought in order that the employer may hire a specific temporary foreign worker, that worker is not involved in the LMIA/LMO process. As a result, where there is a merger, acquisition, or restructuring involving an employer who has been issued an LMIA/LMO for a temporary foreign worker, that LMIA/LMO may no longer be valid.

Employers have an obligation to meet the terms and conditions of an LMIA/LMO exactly as they are laid out in the approval notice. If there is a change to a temporary foreign worker’s employment as a result of a merger, acquisition or restructuring, a new LMIA/LMO must be acquired. Such changes may include, but are not limited to:

  1. A change in the corporate name of the employer;
  2. The re-location of the temporary foreign worker’s employment to new premises; or
  3. A shift in job duties, title, salary or benefits to bring the standards in line with new company policy.

A new LMIA/LMO must also be obtained in any instance where the new entity employing the temporary foreign worker is not a “successor in interest”, in that the successor entity did not substantially assume the interests and obligations, assets and liabilities of the original owner, or did not continue to operate the same type of business as the original owner.

Intra-Company Transferees

Intra-company transferees are issued a work permit in Canada based on their previous employment with a related entity outside of Canada. However, if a merger, acquisition or restructuring takes place, the corporate relationship between the Canadian and foreign companies may no longer exist.

It is important for employers to ensure that any intra-company transferees are assessed to determine whether they still meet the requirements of the category. In some cases, the foreign entity from which the temporary foreign worker is transferred no longer holds a relationship with the Canadian entity. Nevertheless, the temporary foreign worker may still qualify as long as there is another foreign entity with a qualifying relationship to the Canadian entity to which the employee can reasonably be expected to be transferred at the end of their assignment in Canada. If, however, a foreign corporation sells its Canadian subsidiary to a Canadian company, the temporary foreign worker would no longer qualify, as there is no longer a foreign entity with a relationship to the Canadian employer.

Other Considerations

In any case, the same compliance regulations apply to all temporary foreign workers, in that a new work permit must be obtained if there are any changes to the temporary foreign worker’s employment in Canada, including, but not limited to:

  1. A change in the corporate name of the employer;
  2. The re-location of the temporary foreign worker’s employment to new premises; or
  3. A shift in job duties, title, salary or benefits to bring the standards in line with new company policy.

Corporations who have undergone changes as a result of a merger, acquisition or restructuring must submit applications for new work permits for its temporary foreign workers, when applicable, within 90 days (i.e. three (3) months) of the completion of the transaction or restructuring, or risk being liable for non-compliance.

In addition, all corporations must have programs and policies in place to ensure ongoing compliance with immigration regulations at all times, including conducting annual reviews of the employment of temporary foreign workers, in order that the company is prepared in the event of a compliance audit from Immigration, Refugees and Citizenship Canada or Employment and Social Development Canada.

For more information about Employer Immigration Compliance in Mergers, Acquisitions and Corporate Restructuring and ongoing compliance requirements, please contact Carrie Wright (carrie@bartlaw.ca) or Jacqueline Bart (bart@bartlaw.ca) or at our BartLAW general telephone number (416-601-1346).

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