The Asset for Share Agreement is a fundamental document in Canadian corporate restructuring and acquisition transactions, commonly used when parties wish to transfer business assets in exchange for shares, often seeking to achieve tax efficiency through Section 85 rollover provisions of the Income Tax Act. This agreement type is particularly valuable in corporate reorganizations, business combinations, and tax-planned transactions where the seller wishes to maintain an equity interest in the business through share ownership. The document comprehensively addresses asset transfer mechanics, share issuance terms, representations and warranties, tax treatment, and regulatory compliance requirements under both federal and provincial legislation. It's essential for transactions where business continuity and tax efficiency are primary considerations, requiring careful attention to corporate, securities, and tax laws in Canada.
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1. Parties: Identification of the parties to the agreement including the seller(s), purchasing corporation, and any guarantors
2. Background: Context of the transaction, including brief description of the business and assets being transferred
3. Definitions and Interpretation: Defined terms used throughout the agreement and rules of interpretation
4. Sale and Purchase: Core transaction terms including description of assets being sold and shares being issued
5. Purchase Price and Payment: Details of share consideration, including number and class of shares to be issued
6. Conditions Precedent: Conditions that must be satisfied before closing, including regulatory approvals and due diligence
7. Pre-Closing Covenants: Obligations of parties between signing and closing, including conduct of business
8. Closing: Mechanics of closing, timing, and deliverables
9. Representations and Warranties of the Seller: Seller's statements about the assets, business, and authority to enter into the transaction
10. Representations and Warranties of the Purchaser: Purchaser's statements about corporate status, authority, and share issuance
11. Tax Matters: Tax treatment of the transaction, including Section 85 rollover provisions
12. Indemnification: Terms of indemnification for breach of representations, warranties, and covenants
13. General Provisions: Standard provisions including notices, amendments, governing law, etc.
1. Employee Matters: Include when employees are being transferred as part of the transaction
2. Intellectual Property: Include when significant IP assets are part of the transfer
3. Real Property: Include when real estate assets are being transferred
4. Environmental Matters: Include when business involves environmental risks or permits
5. Transition Services: Include when seller will provide post-closing services
6. Non-Competition and Non-Solicitation: Include when restricting seller's future business activities
7. Third Party Consents: Include when material contracts require consent for assignment
8. Earn-out Provisions: Include when part of consideration is contingent on future performance
9. Escrow Arrangements: Include when portion of consideration is held in escrow
1. Schedule A - Purchased Assets: Detailed list and description of assets being transferred
2. Schedule B - Excluded Assets: List of assets explicitly excluded from the transaction
3. Schedule C - Share Terms: Details of rights, privileges, and restrictions of shares being issued
4. Schedule D - Assumed Liabilities: List of liabilities being assumed by purchaser
5. Schedule E - Material Contracts: List of key contracts being assigned
6. Schedule F - Intellectual Property: Details of IP assets being transferred
7. Schedule G - Real Property: Details of any real property included in transaction
8. Schedule H - Employee Information: List of employees and employment terms
9. Schedule I - Required Consents: List of third-party consents required
10. Appendix 1 - Form of Section 85 Election: Tax election forms for rollover treatment
11. Appendix 2 - Closing Documents: Forms of various closing deliverables
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