Net Benefit Review Scope and Process
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. Investments to establish a new Canadian business (other than a cultural business) are also not subject to an NBR; the only requirement under the NBR framework for such investments is to submit a notification. 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, the list of trade agreement countries includes 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. WTO Investors In general, individuals will be WTO investors if they are nationals of countries (other than Canada) that are members of the WTO or have a right of permanent residence in a WTO member country. Similarly 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.
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