Effective July 31, 2020, certain national security review periods under the Investment Canada Act (ICA) have been temporarily extended in light of the COVID-19 pandemic.
The Minister of Innovation Science and Industry has issued a Ministerial Order pursuant to Time Limits and Other Periods Act (COVID-19), which came into effect on July 27, 2020. For more information, see our July 30 Blakes Bulletin: Foreign Investment in Canada: Time Periods May Be Extended Under New Legislation.
Under the Ministerial Order, the following national security review periods have been extended:
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The initial review period for investments requiring an application for review or notification by 15 days (for a total of up to 60 days after the date of certification of filing)
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The review period following receipt of a notice indicating that a national security review may be required by 45 days (for a total of up to 90 days following the date of the notice)
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The initial review period for investments that do not require a filing by 135 days (for a total of up to 180 days after the date of implementation of the transaction)
The illustration from the Investment Review Division summarizes the current national security review process and timelines.
The Ministerial Order does not allow for extended timeframes to go past December 31, 2020, and applies only in respect of applications or notifications certified as of July 31, 2020.
As explained in the accompanying Explanatory Note, the purpose of these extensions is to allow Canada’s security and intelligence agencies to fully review investments that may be injurious to Canada’s national security in the context of the COVID-19 pandemic. The pandemic has impacted the government’s operations as well as the ability of investors and Canadian businesses to obtain and provide relevant information to the Canadian government’s review.
As a result of these extended time periods, foreign investors and Canadian businesses should consider whether a transaction is likely to raise national security concerns and prepare a proactive strategy to address any such concerns. Parties should also anticipate a prolonged screening process or national security review that may affect deal timing and negotiations surrounding parties’ obligations in the event of a national security review.
