Similarly, in order to preserve the ability of Quebec entities to participate in certain sophisticated financing transactions, documents such as loan agreements, financial instruments and contracts dealing with the management of financial risks (such as currency or rate exchange agreements, the purchase or sale of options or futures), clearing house agreements, derivatives agreements (except if with a consumer), and insurance policies which emanate from outside Quebec or not widely used there and have no French-language equivalent in Québec, are all exempt from the requirement to be drafted in French. All deeds and other documents published at Quebec land registry offices relating to immovable (real) property and all notices relating to secured creditors of movable (personal property) published at the Quebec Register of Personal and Movable Real Rights must be filed in French, or in English accompanied by a certified French translation, failing which they will be rejected. MATTERS TO BE CONSIDERED BY AN OFFSHORE PARTY WHEN SELECTING BUSINESS ENTITY TYPE BARRIERS TO ENTRY Competition Act A foreign investor must consider the Competition Act (Canada), which is analogous to US antitrust legislation, when seeking to acquire an interest in a Canadian business, either by acquiring assets or shares. The first step in any acquisition is to determine whether the acquirer and target, on a consolidated basis (including their respective affiliates), will have CDN $400 million or more in aggregate asset value or gross revenues after completing the transaction. If so, the second step is to determine whether (a) in an asset

deal, the aggregate value of the Canadian assets to be acquired or of the annual Canadian sales generated by such assets exceeds the annual threshold (CDN $93 million for 2023), or (b) in a share deal, the aggregate value of the Canadian company whose shares are to be acquired or of the annual Canadian sales generated by such company exceeds the annual threshold (CDN $93 million for 2023). If so, then in both cases pre-notification is required, and the acquirer must receive the approval of the Competition Bureau before it may proceed with the transaction. Even if the financial threshold is not met, the transaction will be reviewable if it is found not to be in the public interest or to create a concentration which would unduly reduce competition. Furthermore, the Competition Bureau always retains the right under Section 92 of the Competition Act to review any transaction where there is a lessening of competition. Where the transaction is non- notifiable, the Competition Bureau will generally only learn of it if a third-party complaint is made. The statutory exceptions to the application of the Competition Act include acquisitions of public companies or real estate, and transactions made in the ordinary course of business. The approval may be conditional upon the divestment by the acquirer and/or target of certain businesses, but, generally speaking, the Competition Bureau favours structural remedies over behavioural ones. Investment Canada Act A non-Canadian establishing a new business in Canada or acquiring control of an existing Canadian business must also consider the Investment Canada Act . Any investment by a

ILN Corporate Group – Establishing a Business Entity Series

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