CHAPTER 07 Competition Act, Investment Canada Act and Other Restrictions on Foreign Ownership
NET BENEFIT UNDERTAKINGS – When an acquisition is subject to a net benefit review, the investor typically must provide undertakings to the relevant Minister in order to obtain approval. Undertakings are typically for a three- to five-year term and cover areas such as employment, capital expenditures, technology transfer, research and development in Canada and maintaining a Canadian head office and management. Undertakings to address issues with state-owned enterprises may be for longer terms or indefinite in duration. – Investors who fail to comply with their undertakings may be subject to a variety of court-ordered remedies, including orders to comply with the original undertakings or revised undertakings, to divest the Canadian business or to pay monetary penalties. NET BENEFIT REVIEW PERIOD – Within 45 days of receiving an application for review, the relevant Minister must indicate whether the investment is likely to be of net benefit to Canada. This period may be unilaterally extended by the Minister for a further 30 days, which is common. Additional extensions can occur only with the investor’s consent, although such consent is typically provided. – If the Minister gives notice that they are not satisfied that the transaction is likely to be of net benefit to Canada, the investor then has 30 days (or more on consent) in which to make further representations to the Minister.
FILING FEES – There are no fees for filing either notifications or applications for review under the ICA.
NATIONAL SECURITY REVIEW – Regardless of whether an investment is subject to a net benefit review, the ICA provides for the review of investments that “could be injurious to national security.” – The Minister of Innovation, Science and Industry has broad discretion to subject a proposed investment by a non-Canadian to a national security review. > The expression “national security” is not defined in the ICA and there are no monetary thresholds that must be exceeded to trigger a national security review. > There is no requirement that there be an acquisition of control of a Canadian business. A national security review could be ordered whenever there has been an acquisition “in whole or in part” of a Canadian business. – The Minister has until 45 days after the filing of a notification or an application for net benefit review to issue a notice to a non-Canadian that its investment may be subject to a national security review (alternatively, a national security review can be initiated within the same time period without such a notice first being sent). For transactions not subject to notification or net benefit review (and that are not voluntarily notified), the timeframe for the Minister to issue such a notice extends to five years after implementation of the investment.
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