CHAPTER 06 Foreign Investment
Trade Agreement Investors Under the ICA, generally an individual will be a trade agreement investor if he or she is a “national” of a country (other than Canada) that is a “trade agreement country” – that is, a country that has a trade agreement with Canada. Currently, the list of trade agreement countries includes Australia, Brunei, Chile, Colombia, Honduras, Japan, Malaysia, Mexico, New Zealand, Panama, Peru, Singapore, South Korea, the United Kingdom, the United States, Vietnam, and the European Union and its member states. (The list of trade agreement countries may change as the Canadian government enters or exits trade agreements in the future.) 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 (i) if a majority of the voting shares of the public company are owned by trade agreement investors; or (ii) if no person or voting group controls the company, at least two-thirds of the members of the company’s board of directors are any combination of trade agreement investors and Canadians. WTO Investors In general, an individual will be a WTO investor if he or she is a “national” of a country (other than Canada) that is a member of the WTO or has a right of permanent residence in a WTO member country. Similar to the definition of a trade agreement investor, a corporation or other entity will be a WTO investor if it, in turn, is ultimately controlled by one or more WTO investors. A widely held public company will generally be a WTO investor for the purposes of the ICA (i) if a majority of the voting shares of the public company are owned by WTO investors; or (ii) if no person or voting group controls the company, at least two-thirds of the members of the company’s board of directors are any combination of WTO investors and Canadians.
Indirect Acquisition Generally speaking, an “indirect acquisition” for the purposes of the ICA occurs if an investor is acquiring control of a corporation that is incorporated outside Canada and controls an entity in Canada carrying on a Canadian business. State-Owned Enterprise An SOE is broadly defined to include a foreign government or government agency, or an entity that is controlled or influenced, directly or indirectly, by a foreign government or government agency. The ICA does not define the term “influenced,” but it is clear that it would include something less than legal control. In addition, the ICA gives the Minister the discretion to deem an entity to be non-Canadian if the Minister is satisfied that the entity is controlled in fact by one or more SOEs. Moreover, the Minister has discretion to determine that an investment by a state-owned enterprise constitutes an acquisition of control in fact even if it is below the otherwise applicable thresholds. Cultural Business The acquisition of a Canadian cultural business is subject to lower review thresholds under the ICA because of the perceived sensitivity of the cultural sector. A “cultural business” includes a business that carries on any of the following activities: (i) publication, distribution or sale of books, magazines, periodicals or newspapers in print or machine-readable form, other than the sole activity of printing or typesetting of books, magazines, periodicals or newspapers; (ii) production, distribution, sale or exhibition of film or video recordings (including video games); (iii) production, distribution, sale or exhibition of audio or video music recordings; (iv) publication, distribution or sale of music in print or machine-readable form; or (v) any radio communication
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