Buying a Business in Canada

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If you have the access to capital and the business acumen to buy an existing business in Canada, you may be able to avail yourself to preferential immigration benefits under the Owner-Operator Program LMIA work permit (OOP-LMIA).  When considering options, foreign investors and entrepreneurs wishing to relocate to Canada should strongly consider purchasing an established business or even launching a new business in Canada.  Such would enable an application for a work visa for the foreign investor to manage the business as an employee.   After a period of employment in Canada the work permit holder can often pursue a transition to Canadian permanent residence under an eligible provincial nominee program or using an Express Entry program.

In such cases, the path to Canada would begin with temporary residence status as a foreign worker.   If approved, the OOP-LMIA will enable a work permit issued to the foreign investor following the sale and transfer of an eligible business in Canada.  Current rules stipulate that the foreign national must hold the majority share ownership of an existing viable Canadian business.

The next stage depends on what happens in Canada once the foreign investor is admitted on a work permit.  Successful candidates can make an application at a later date for Canadian Permanent Residence based upon their work experience acquired in Canada

The Owner-Operator Program (OOP)

The OOP-LMIA program is not recognized as a formal immigration program. However it is a viable strategy that does afford an opportunity to recreate an immigration program in the aggregate.   As such, it is very much an attractive process for those prospective investors and entrepreneurs who feel left out of other more established Immigration programs where eligibility requirements may be more onerous.   

The OOP-LMIA is a complex program to manage without credible legal advice and representation.  A foreign investor can purchase/acquire/create a business in Canada and then apply to enter as an employee of said business.   By acquiring an existing Canadian business, the Employer being acquired must be a legal entity that in turn contracts to make an offer of employment to the foreign investor (purchaser) to be deployed in a managerial capacity and perform work in Canada for remuneration at market rates.   

To qualify under the OOP-LMIA, the owner-operator foreign employee must establish controlling interest in the business and under contract of employment to be actively involved in its operation. The offer of employment must bind the foreign investor to be actively involved in the management of the business in Canada.  It stands to reason that intention will be examined closely, together with foreign experience in the management and operation of a business.

An “employer/employee relationship” must be clearly identified to facilitate an LMIA approval under existing rules and regulations of Canada’s Temporary Foreign Worker Program.  Therefore, it is important that the business plan and the contract to purchase shares in the Canadian business must be clear in establishing an employer/employee relationship within the offer of employment.

All components of an OOP-LMIA must be carefully studied and analyzed as many factors work together when a self-employed individual intends to enter Canada to establish/purchase a business with the intent to be involved in its day-to-day operations.  All applications should contain a clear and discernible job offer component.   However, in the absence of one, the foreign worker’s business plan together with the share purchase contract must serve to establish the offer of employment. A well prepared application must account for the intent of this program to facilitate the entry of workers whose presence in Canada will create or retain jobs for Canadians.  Evidence should also be proffered that the transfer of skills or knowledge from the foreign worker to Canadians will take place.

Purchase of an Existing Businesses

There are different closing options when a foreign investor acquires or contracts to acquire absolute or substantial ownership interest of an existing business in Canada.  Where the transaction is complete before the visa process, the Applicant must gather a complete package of documentary evidence to substantiate the burden of proof.   Submissions must substantiate a transition plan showing how the application will meet the requirement for the creation or retention of Canadian jobs and the transfer of knowledge to Canadians.  The owner of the business must apply as the Employer for permission to work as a manager who will manage and direct the business.  This permission comes in the form of a Labour Market Impact Assessment (LMIA) needed to support an owner-operator work permit being issued.

Another closing option is the conditional pending purchase transaction. Such purchase agreements for an existing business are made contingent on a successful LMIA process and a work permit being issued by Canadian immigration authorities.  Conditional sale contracts will lend themselves to increased scrutiny in order to ensure the genuineness of the contemplated transaction. We strongly recommend when using conditional pending purchase transactions, sale monies be held in escrow while other challenges being addressed in the application submissions.  Either the existing or pending owner can apply for an LMIA as the Employer with different requirements and processes required for both instances.

Where the agreement of purchase and sale of shares is made conditional on immigration approvals and work permit issuance, these applications must be strategically formulated to account for increased scrutiny and concerns expected in the vetting process.   

Kadri Law has accumulated a wealth of knowledge and expertise in all areas of Canadian immigration and business law.  For almost 2 decades, we have successfully processed over 10,000 Canadian Immigration cases utilizing every possible Immigration program Canada offers.   We are committed to finding the right program for you, the one that best meets your goals and objectives while optimizing your prospects for success.

For more information on the purchase of an eligible business in Canada, please contact Eddie H. Kadri to arrange a comprehensive legal immigration consultation.

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