Tag archives: contractual agreements

Pension plan considerations in the M&A context

In any acquisition, whether for shares or assets, employee benefits and obligations must be taken into account. One of the potentially most onerous obligations includes the provision of pension benefits to employees – this makes it all the more important for companies contemplating acquisitions to consider potential employee pension plan implications.

In a share purchase context, the buyer will typically assume all liabilities of the target company, and if the target company has a pension plan in place, this will often be included. However, if there are significant pension fund deficits, this may be one reason an asset purchase agreement … Continue Reading

Price adjustment clauses in contractual agreements

This article highlights the importance of price adjustment clauses in contractual agreements from a tax perspective.

A price adjustment clause is often used in transactions if property is transferred between non-arm’s length taxpayers and the intention of the parties is for the transaction to occur at fair market value (FMV). If the transaction is later determined by the Canada Revenue Agency (CRA) to be at something other than at FMV, disastrous tax consequences can result. For example, under the Income Tax Act (Canada), if a taxpayer acquires property from a non-arm’s length person for an amount … Continue Reading

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