CHAPTER 07 Competition Act, Investment Canada Act and Other Restrictions on Foreign Ownership
– The federal government has also made a series of recent policy announcements identifying particular types of investors and/or sectors that are more likely to give rise to potential national security concerns, specifically: > foreign investments in Canadian businesses related to public health, as well as all investments by foreign state-owned investors, will be subject to “enhanced scrutiny” under the ICA in general; > foreign investments, regardless of value, with ties to an individual or entity associated with, controlled by or subject to influence by the Russian state will support a finding by the Minister that there are reasonable grounds to believe that the investment could be injurious to Canada’s national security (i.e., there will be grounds to conduct enhanced national security screening or to commence a national security review); and > investments by a foreign state-owned enterprise (or foreign-influenced private investor) involving a Canadian business or entity operating in a critical minerals sector in Canada will support a finding that there are reasonable grounds to believe the investment could be injurious to national security. This policy applies to critical minerals investments regardless of value, whether direct or indirect, whether controlling or non-controlling, and across all stages of the value chain (e.g. exploration, development and production, resource processing and refining, etc.). Shortly after issuing its critical minerals policy, the government announced that it had ordered three Chinese mining companies to divest minority investments in Canadian critical minerals companies. – In 2022, the government disclosed that, in the context of a national security review of a transaction in the forest products industry that was not subject to a net benefit review, the foreign investor provided commitments that included ensuring strong levels of investment in facilities in the Province of Quebec, maintaining existing Canadian patents, maintaining Canadian participation on the acquired company’s board and senior management and adhering to Canadian employment and environmental laws. The scope of these commitments (involving matters that have in the past been addressed in net benefit reviews) suggests the potential for expansive national security reviews beyond typical national security considerations. – The Minister provides information on the national security review process, as well as high-level data relating to transactions reviewed under the national security provisions, in annual reports that are made available online. The annual reports provide, among other things, information about investor country of origin, target business industry and the kinds of mitigation measures that were considered in relation to investments that have been subject to national security review. In addition, since October 2022, the government’s policy is to announce all final decisions that involve an order to block or divest an investment, or allow an investment to proceed only on the basis of mitigation measures. PROPOSED AMENDMENTS TO THE NATIONAL SECURITY REVIEW PROCESS – In December 2022, the federal government introduced draft legislation that would make significant changes to the ICA’s national security regime, including: a new pre-closing notification filing regime for investments in certain (yet-to-be) prescribed sensitive sectors;
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Davies | dwpv.com
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