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ARTICLE · 17 MARCH 2009

Managing Pension Risks In Corporate Transactions - Part 2

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Mergers and acquisitions can bring a host of pension and benefits issues to the surface. To minimize the risks associated with acquiring or divesting pension liabilities, each party to a corporate transaction must be aware of its options as well as the consequences that flow from each.

CanadaEmployment and HR
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Article by Mitch Frazer, Torys LLP, and Jana Steele, Goodmans LLP

3. Evaluating Options and Obligations in Complex Corporate Transactions or Restructurings

When determining what type of transaction to enter into, a buyer and seller must evaluate the potential pension issues that may arise under each structure and their corresponding options and obligations. This section outlines the issues that a buyer and seller can expect to encounter when entering into each type of transaction.

Pension Issues Specific to Share-Purchase Transactions

In a share-purchase transaction, the buyer essentially "steps into the shoes" of the seller. The corporation continues as the same legal entity but under the control of the new shareholder(s). Unless stipulated otherwise, all pension plan assets and liabilities remain with the corporation following its sale.

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