CHAPTER 08 Investment Canada Act and Other Restrictions on Foreign Ownership
NSR UNDERTAKINGS – Depending on the particular circumstances, conditions or commitments for NSR clearance – short of a prohibition or full divestiture of a Canadian business – could potentially include the following:
> excluding sensitive business segments or assets from a transaction; > maintaining a Canadian presence on affiliate corporate boards; > maintaining existing Canadian patents; > investing in modernization of Canadian facilities;
> requiring that all servicing and support for some business lines be conducted in Canada; > establishing approved security protocols to safeguard information and data or access to sensitive sites; > appointing a security-cleared compliance officer to monitor and report on compliance; > requiring third-party compliance audits on request; > permitting facility access to the government for compliance inspections; > notifying the Minister of new prospective employees who would have access to sensitive information or technology as a part of their job description; and > requiring government approval of proposed business locations to avoid proximity to strategic assets. ENFORCEMENT OF THE NSR PROVISIONS – Details of NSRs are often not made public, but limited disclosure in recent years indicates that NSRs have involved investments in a wide range of sectors. While some sectors obviously attracted potential national security concerns – for example, metal ore mining, data processing, computer systems design, and scientific research and development services – others were less obvious (e.g., grocery stores, taxi and limousine services, and schools and instruction). This diverse range underscores the discretionary and at times unpredictable nature of the NSR process. – The NSR Guidelines indicate that the potential for an investment to undermine Canada’s economic security through enhanced integration of the Canadian business with the economy of a foreign state is a relevant factor in assessing an investment’s impact on Canadian national security. – Investments by SOEs and other investors from China and Russia have been subject to particular scrutiny under the NSR framework. A 2022 policy statement on foreign direct investment in Canada by Russian entities or investors (Russia Policy) states that ties between an investment and individuals or entities associated with or subject to the influence of the Russian state will support a finding that the investment could be injurious to Canada’s national security.
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Davies | dwpv.com
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