Foreign Direct Investment Regimes 2023: Canada

Foreign Investment Policy -

1.1 -

What is the national policy with regard to the review of foreign investments (including transactions) on national security and public order grounds?

The review of foreign investments in Canada is governed primarily under the Investment Canada Act (“ICA”), which sets out the processes for three types of review of foreign investments: economic; cultural; and national security. Economic: Subject to certain limited exemptions, under the economic provisions of the ICA, every acquisition of control by a non-Canadian of a Canadian business, even where the target business is already controlled by a non-Canadian, requires either an administrative notification (which can be filed up to 30 days post-closing) or a detailed pre-closing review (during which time closing of the investment is prohibited). Whether a transaction is subject to notification or review depends on whether certain financial and ownership thresholds are met. The applicable financial threshold to a given transaction depends on several factors, including the structure of the transaction, the value of the transaction or business and the investor or vendor (including the nationality and the investor’s potential status as a state-owned or state-influenced entity). See question 3.1, below, for the applicable rules and thresholds. If an investment requires review, it must be approved by the federal government on the basis that it is likely to be of “net benefit” to Canada. Such a “net benefit” determination typically requires that the investor provide legally binding undertakings regarding the future conduct of the acquired business.

Originally written for Foreign Direct Investment Regimes, published by the International Comparative Legal Guides - November 2022.