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Mergers and Acquisitions in Canada


Canadian registered pension plans are subject to an assortment of federal and provincial pension legislation. Unlike the case with ERISA, there is no uniform pension legislation across the country.

Federal pension legislation applies to a plan whose members are employed in a sector that is within the legislative authority of the federal government (e.g. banking, shipping, broadcasting). If the federal pension legislation does not apply, then the pension legislation of the province in which the plan members are employed applies. A pension plan with members employed in various jurisdictions is subject to the pension laws of all the applicable jurisdictions.

Every pension plan must be registered with the pension regulator of the jurisdiction in which the majority of plan members are employed. The pension regulator enforces the pension laws of other jurisdictions that apply to the plan. In limited circumstances, dual registration may be required.

The lack of uniform pension legislation across Canada can be problematic for employers because pension legislation across the country is not always consistent.

All Canadian pension plans must be registered with the Canada Revenue Agency (the “CRA”) and comply with specific provisions of the Canadian Income Tax Act[[(1985, c.1 (5th Supp.))]] (the “Act”) in order to receive favourable tax treatment. Eligible employer contributions to a registered pension plan can be set-off against business profits. Such contributions (and the earnings thereon) are not included in employees’ income until pension benefits are paid out to the employees.

Additional posts from the blog

May

21

New Bill Heightens Potential for More Investment Canada Reviews of SOE Acquisitions

by Sandra Walker

Last week the Canadian Government introduced amendments to the Investment Canada Act (ICA) to implement its revised policy towards state-owned enterprises (SOEs) which it announced in December last year. At that time, while it approved the acquisition by Chinese SOE, CNOOC, of Canadian oil and gas company, Nexen, the Government announced its intention to prohibit acquisitions of control of Canadian oil sands businesses by SOEs except on an exceptional basis. It also stated that joint ventures and minority investments were welcome. In addition, the government indicated it would closely monitor SOE acquisitions in other sectors of the economy and would distinguish between SOE and non-SOE investments when setting the ICA review threshold. (See Focus on Foreign Investment Review, December 2012)

May

13

The Autorité des marchés financiers Proposes An Alternative Approach to Securities Regulators Intervention in Defensive Tactics

by Guy Paul Allard

On March 14, 2013, the Autorité des marchés financiers (“AMF”) published for comments a consultation paper (the “AMF Proposal”) pertaining to defensive tactics in response to take-over bids. This consultation is taking place concurrently with the one launched the same day by the Canadian Securities Administrator (“CSA”) with the release of proposed National Instrument 62-105 Security Holder Rights Plans and proposed Companion Policy 62-105CP Security Holder Rights Plans (collectively, “62-105”). Unlike the CSA’s 62-105, the AMF Proposal addresses all defensive tacticsii, not only security holders rights plans.

May

10

Proposed New Framework for Rights Plans a Potential Game Changer for Hostile Bids

by Daniel Katzin

The Canadian Securities Administrators published for comment a proposed new regulatory framework for rights plans under proposed National Instrument 62-105 Security Holder Rights Plans and proposed Companion Policy 62-105CP Security Holder Rights Plans (collectively, “62-105”). If adopted, 62-105 would provide issuers with a game changing tool to respond to hostile take-over bids, where a target board will be able to use a rights plan as leverage to negotiate with a potential bidder.



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