– A 2022 policy statement on critical minerals indicates that the participation by a foreign SOE in an investment in the critical mineral sector in Canada, regardless of value or ownership interest, will support a finding that the investment could be injurious to Canada’s national security. Under that policy, the Canadian government has blocked or unwound at least six investments by Chinese SOEs in the critical minerals sector. – Although the discretionary nature of the NSR provisions, including the lack of a definition of “national security” and the potentially long time frames for review, may create considerable uncertainty regarding the application of the ICA for certain foreign investments in Canada, some recent federal government initiatives signal a relatively greater flexibility and pragmatism in NSR reviews. These include indications that the government is open to more investment by China in the oil sands sector and permitting Tik Tok to continue to operate in Canada notwithstanding a 2024 decision to order that Tik Tok wind-up its Canadian operations. VOLUNTARY NOTIFICATIONS UNDER THE NSR FRAMEWORK – There is a voluntary NSR preclearance filing mechanism for investments that are not captured by the mandatory NBR process. Following receipt of a complete voluntary notification, the Minister has an initial 45 days to determine whether to pursue a full NSR (subject to a right to extend this period by a further 45 days). If the non-Canadian investor does not utilize the voluntary filing option, the Minister may commence an NSR at any time prior to closing and for up to five years after the implementation of the investment. As a result, non-Canadian investors who are not otherwise required to submit an application for an NBR or a notification of an investment in a Canadian business may voluntarily notify the Minister if they want to obtain certainty that an NSR process will not be subsequently undertaken. PENDING PRECLOSING NOTICE REQUIREMENTS UNDER THE NSR FRAMEWORK – Amendments to the ICA passed by Parliament, but not yet proclaimed in force, will introduce a new mandatory preclosing notification regime for investments in specific sectors to be prescribed. Draft regulations identifying these sectors have not yet been released, but they are expected to reflect the business activities highlighted in the NSR Guidelines. – The pending amendments will require non-Canadian investors to notify the Minister of the investment in advance of implementation of either: > an acquisition of control of a Canadian business carrying on a prescribed business activity that is not subject to an NBR – that is, indirect acquisitions of control and acquisitions of control below the applicable monetary thresholds summarized below under Monetary Thresholds for NBRs; or > an acquisition, in whole or in part, of a Canadian-linked entity carrying on a prescribed business activity if the investor would acquire (i) access to, or direct the use of, material non-public technical information or material assets; (ii) the power to appoint or nominate a
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Canadian Mergers & Acquisitions
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