Nothing moves on its own. In a share sale the contractor is the same corporation, so the federal contract runs on untouched. In an asset sale it transfers only if Canada consents in writing, and the Financial Administration Act permits assignment of the money owed, never of the obligation to perform.
Key takeaways
SECTION 01 OF 10
A share sale assigns nothing. The party to a federal contract is the corporation, and CBCA section 15(1) gives it “the rights, powers and privileges of a natural person”. Selling the shares changes who owns that person, not the person.
An asset sale is the mirror image. The buyer is a different legal person, so each federal contract must be moved deliberately, and the counterparty whose agreement you need is the Crown — a discretionary call by a contracting authority, on its own timetable. Structure is not a tax preference here; it decides whether Ottawa can stop your closing. Treadstone Law’s pre-deal assignability review belongs before signing; the private-counterparty version is a separate article.
SECTION 02 OF 10
Part VII is headed Assignment of Crown Debts, and the heading is exact. Section 67: “Except as provided in this Act or any other Act of Parliament, (a) a Crown debt is not assignable; and (b) no transaction purporting to be an assignment of a Crown debt is effective so as to confer on any person any rights or remedies in respect of that debt.”
Section 66 defines a Crown debt as “any existing or future debt due or becoming due by the Crown” plus any other chose in action enforceable against it. Part VII is a rule about receivables; it says nothing about who may perform the work.
SECTION 03 OF 10
Subsection 68(1), marginal note Assignments of specified Crown debts, permits assignment of “a Crown debt that is an amount due or becoming due under a contract”. Subsection (2) makes it valid only if “it is absolute, in writing and made under the hand of the assignor”, if it is not by way of charge only, and if notice has reached the Crown under section 69.
That notice is where deals lose weeks. Section 69(2): “Service of the notice referred to in subsection (1) shall be deemed not to have been effected until acknowledgment of the notice, in prescribed form, is sent to the assignee, by registered mail, under the hand of the appropriate paying officer.”
A federal receivable therefore changes hands not at closing but when that acknowledgement is posted. The Assignment of Crown Debt Regulations prescribe both forms and, for a corporate assignor, a certified copy of the authorising resolution — a slower clock than ordinary receivables.
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Every defence the Crown already had. Subsection 68(3) passes the legal right and remedies “subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted”.
Subsection (4) makes an assignment “subject to all conditions and restrictions in respect of the right of transfer” attaching to the debt or the original contract; and set-off survives, so a purchased receivable can shrink over a dispute the buyer never saw — the federal face of contractual set-off.
SECTION 05 OF 10
Transfer of the contract is governed by the contract, and federal contracts incorporate published general conditions. SACC general conditions 2010A, cl. 22: “The Contractor must not assign the Contract without first obtaining the written consent of the Contracting Authority. Any assignment made without that consent is void and will have no effect.” The mechanism is tri-party — “an assignment agreement signed by the Parties and the assignee” — and the limit express: “Assignment of the Contract does not relieve the Contractor from any obligation”.
Identical wording sits at 2010B cl. 22, 2010C cl. 19, 2030 cl. 29 and 2035 cl. 27 on the same page, and Supply Manual section 8.90 agrees: “the written permission of Public Works and Government Services Canada (PWGSC) is required before any contract assignment”, with the assignee also required to meet the contract’s security requirements. PSPC’s current modernized general conditions go further: assignment only if Canada agrees in writing and the contractor stays responsible for the assignee.
SECTION 06 OF 10
I looked for it. The Treasury Board Directive on the Management of Procurement contains no whole-word “novation” — every match sits inside “innovation” — and no whole-word “assignment” outside a reference to staff “assigned to the role of business owner”. The ten chapters of the archived Supply Manual contain none, nor do the modernized general conditions. That is a sourced absence, not an inference.
It matters because the mechanisms differ. As Treadstone Law’s account of novation against assignment puts it, novation is the three-party agreement that extinguishes the old contract and releases the seller; assignment alone releases nobody. Canada asks for the three signatures a novation needs and withholds the release. In its facilities-services case study, public-body contracts carrying most of the revenue would not assign: the deal closed only after price and timeline moved, and one contract was lost.
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Federal money moves on certification. Section 34(1) bars payment unless an authorised person certifies “that the work has been performed, the goods supplied or the service rendered” at the contract price, on a requisition under section 33. Supply Manual section 8.65 is blunt: “Payments to persons other than those named in the contract will only be made in cases of bankruptcy, the appointment of a receiver-manager, or an assignment of debt pursuant to Part VII of the Financial Administration Act”.
And one term rides on every federal contract by statute, section 40(1): “It is a term of every contract providing for the payment of any money by Her Majesty that payment under that contract is subject to there being an appropriation for the particular service for the fiscal year” in which the commitment falls due. Federal backlog is conditional revenue.
SECTION 08 OF 10
A share sale touches no contract and still triggers a filing. The Ineligibility and Suspension Policy, effective 31 May 2024, requires disclosure of “the names of all directors and the names of all individuals and entities that hold 5% or more ownership of a private corporation”, then a continuing duty to report any “change to the information provided pursuant to section 13.1” — including one caused by a transfer — “within 22 business days” for awarded contracts.
On the asset side the policy reaches the buyer. A replacement entity includes “an assignee in the event that the supplier to a contract assigns the contract”, and is itself a supplier, so the assignee is screened on its own record. Treadstone Law’s inherited-audit case study shows the reverse: buying the entity buys its history with government.
SECTION 09 OF 10
The Directive is in force: “This directive takes effect on May 13, 2021”, replacing the Contracting Policy of April 11, 2019 and applying to “all departments listed in Schedules I, I.1 and II of the Financial Administration Act” bar the CRA. The two documents most people quote are retired: the Supply Manual “has been archived and will no longer be updated”, the SACC Manual “is no longer being maintained as of June 2023”, and new solicitations use the modernized documents.
The cost of not checking is inside the archive. Supply Manual section 8.70.2 restates the pre-award integrity deadline as “within five (5) business days of any such change”; the live policy at section 13.2.4 says 10 business days. Both were fetched the same day. Where a manual restates a policy and they differ, the policy governs; where a policy restates a statute, the statute does.
SECTION 10 OF 10
Identify every federal contract and the general conditions it incorporates, because that is where the assignment clause lives; read the clause, not the purchase agreement’s description of it; approach the contracting authority early; and confirm the buyer can hold any clearance and the certification section 8.90 requires. The book is checkable from outside: section 42(1)(e) authorises regulations requiring public disclosure of federal contracts “having a value in excess of $10,000”.
If a contract cannot transfer, the options are a fresh contract, a share structure, or a price adjustment; the Oshawa licence case study shows what the third costs, and assignability promised but never obtainable becomes an indemnity claim or a failed closing condition. A share sale avoids the consent and a change-of-control clause hands it straight back, so read the material contracts before choosing the structure.
Two boundaries. This is federal departmental procurement — Part VII, the Treasury Board Directive, the PSPC instruments. Provincial and municipal procurement rest on their own statutes and are not described here, nor are the Schedule III Crown corporations section 70 excludes. Departments other than PSPC may use different general conditions, so the clause above is the common federal pattern, not a guarantee about your contract.
No. In a share sale the contracting party is still the same corporation, so the federal contract runs on untouched — only its ownership has changed. It is an asset sale that requires Canada’s written consent, because the buyer is a legally different party from the one the contract names.
No. Standard federal general conditions state that assignment of the contract does not relieve the contractor from any obligation, so consenting to an assignment is not the same as a novation, which is the three-party agreement that extinguishes the old contract and releases the seller. Canada’s instruments withhold that release.
No. Subsection 68(3) passes the assigned receivable subject to all equities that would have taken priority over it had the assignment not happened, and set-off survives the transfer — so a purchased federal receivable can shrink over a dispute the buyer never even knew about.
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