CHAPTER 08 Investment Canada Act and Other Restrictions on Foreign Ownership
person with the capacity to direct the business and affairs of the Canadian-linked entity, such as a member of the board of directors or senior management, a trustee or a general partner; or (iii) any other types of special rights that may be prescribed. – The government will prescribe a minimum waiting period following such a notification before implementation can occur. If the Minister initiates an NSR process in that period, the investment cannot be implemented until the NSR process is terminated or the investment is approved.
Net Benefit Reviews
WHICH NBR THRESHOLD WILL APPLY? – Acquisitions of control of Canadian businesses are subject to an NBR if they exceed certain prescribed monetary thresholds. If the relevant thresholds are not exceeded, the foreign investor need only submit a notification preclosing or within 30 days of closing. – The applicable threshold for an NBR depends upon several considerations, including the following: > Is the foreign investor or the Canadian business that is being acquired ultimately controlled by “trade agreement investors”? > Is the foreign investor or the Canadian business that is being acquired ultimately controlled
by World Trade Organization (WTO) investors? > Is the acquisition of control direct or indirect? > Is the foreign investor an SOE? > Is the Canadian business a cultural business?
Trade Agreement Investors – In general, individuals will be “trade agreement investors” if they are nationals of a country (other than Canada) that is a “trade agreement country” – namely, a country that has a trade agreement with Canada. Currently, “trade agreement countries” include Australia, Brunei, Chile, Colombia, Honduras, Japan, Malaysia, Mexico, New Zealand, Panama, Peru, Singapore, South Korea, Ukraine, the United Kingdom, the United States, Vietnam, and the European Union and its member states. (This list may change as the Canadian government enters or exits trade agreements.) Further, a corporation or other entity will be a trade agreement investor if it is ultimately controlled by one or more trade agreement investors. A widely held public company will generally be a trade agreement investor for the purposes of the ICA if (i) a majority of the voting shares of the company are owned by trade agreement investors; or (ii) no person or voting group controls the company, and at least two-thirds of the members of the company’s board of directors are any combination of trade agreement investors and Canadians.
47
Davies | dwpv.com
Powered by FlippingBook