CHAPTER 08 Investment Canada Act and Other Restrictions on Foreign Ownership
– ICA guidelines for NBRs of investments by SOEs (SOE Guidelines) state that such NBR reviews will also focus on whether the investor adheres to Canadian standards of corporate governance (such as commitments to transparency and disclosure, and independence of board and audit committee members) and whether the Canadian business will continue to operate on a commercial basis (for example, with respect to where the Canadian business will process and export its products). – Additional ICA guidelines recognize that NBR undertakings are based to some extent on projected circumstances, and state that, where inability to fulfill an undertaking is clearly the result of factors beyond the control of the investor, the investor will not be held accountable. That said, where there is an issue regarding compliance with an undertaking, the ICA allows the Minister to accept a new or “replacement” undertaking. NBR TIMING – For NBRs, within 45 days of receipt of a completed NBR application, the Minister must either indicate whether he or she is satisfied that the investment is likely to be of net benefit to Canada or extend the review period for a further 30 days (with potential further extensions of the review period with the consent of the investor). If the Minister has advised the investor that he or she is not satisfied that the investment is likely to be of net benefit to Canada, the investor has an additional 30 days (or any longer period that may be negotiated) to make further representations and submit additional undertakings. – In practice, average review times for NBRs have ranged from about 70 to 100 days, with some high-profile transactions taking much longer. That said, the Teck Resources/Anglo American merger received NBR clearance within about three months of announcement in September 2025, notwithstanding that it involved an acquisition of a major Canadian company in the critical minerals sector. – Generally, the ICA prohibits the implementation of an investment subject to an NBR until the completion of the Minister’s review. ENFORCEMENT OF THE NBR PROVISIONS – Acquisitions are rarely refused approval under an NBR – since the ICA came into force in 1985, only two proposed acquisitions in non-cultural sectors have resulted in ministerial decisions that the transaction failed to meet the net benefit standard. In 2008, the Minister denied approval of a proposed C$1.325 billion acquisition by Alliant Techsystems Inc. of the space division of MacDonald, Dettwiler and Associates Ltd. In 2010, the Minister announced that BHP Billiton’s unsolicited C$38 billion offer to acquire Potash Corporation of Saskatchewan Inc. was not likely to be of net benefit to Canada. However, government policy statements or initial feedback during an NBR may have either deterred some investments from being proposed at all or prompted parties to abandon proposed transactions before forcing the Minister to make a formal NBR decision.
51
Davies | dwpv.com
Powered by FlippingBook