The following chart summarizes the general rules for determining whether an investor has acquired control of a Canadian business:
Acquisitions of Control
Partnership, Trust or Joint Venture
Acquisitions of Control
Corporation
Majority of the voting shares or interests
Acquisition of control
Acquisition of control
More than one-third, but less than a majority of the voting shares (corporation) or less than a majority of the voting interests (partnership, trust, joint venture) Less than one-third of the voting shares of a corporation (or an equivalent, undivided ownership interest in the voting shares)
Presumed acquisition of control, unless it can be shown that the corporation will not be controlled in fact through the ownership of the shares
No acquisition of control
No acquisition of control
Not applicable
FACTORS TO DETERMINE THE RELEVANT THRESHOLDS Acquisitions of control are subject to net benefit review under the ICA if they exceed certain prescribed financial thresholds. If the relevant thresholds are not exceeded, the only requirement by the foreign investor is to submit a relatively straightforward notification within 30 days of closing. (However, even when the net benefit review thresholds are not exceeded, an ICA review may take place on national security grounds. See National Security Review, below.) Investments to establish a new Canadian business (other than a cultural business) are not subject to net benefit review; the only requirement is to submit a notification. The thresholds for net benefit review vary depending upon several considerations, including the following: – Is the foreign investor or the Canadian business being acquired ultimately controlled by trade agreement investors? – Is the foreign investor or the Canadian business being acquired ultimately controlled by World Trade Organization (WTO) investors? – Is the acquisition of control direct or indirect? – Is the foreign investor a state-owned enterprise (SOE)? – Is the Canadian business a cultural business?
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Doing Business in Canada
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