Privilege Ownership Should Be On Every Corporate Transaction Checklist

In what appears to be the first decision of its kind in Canada, the Alberta Court of Queen's Bench has held that a corporate subsidiary's rights to certain privileged communications will be transferred to a purchasing entity unless precautions are taken. Specifically, the Court found that a subsidiary's rights in respect of privileged communications relating to a share purchase transaction will be transferred to the purchasing entity when: (1) under the share purchase agreement, the purchasing entity buys the shares of the subsidiary from the selling entity; (2) the share purchase agreement does not reserve to the selling entity ownership of the privileged communications; and (3) the subsidiary is subsequently amalgamated with the purchasing entity.