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Foreign investment notifications

Things to know

Notifications 

  • Investments by non-Canadians to establish a new Canadian business or acquire control over an existing Canadian business are either notifiable or reviewable under the Investment Canada Act.
  • There are detailed rules that define when an investor is a “Canadian” and when there is an acquisition of control, as well as guidelines on when a “new” business has been established.

Reviewable investments

  • Whether an investment is reviewable turns on the structure of the transaction as well as the value of the acquisition of the Canadian business.
  • In general, only direct acquisitions of control of Canadian businesses can be subject to pre-closing review and approval, whereas indirect acquisitions (e.g., through acquisition of shares of a non-Canadian parent entity) are generally not reviewable but may be subject to post-closing notification.
  • Different thresholds for review apply depending upon the type of transaction (i.e., private sector WTO investments, private sector trade agreement investments, state-owned enterprise WTO investments, non-WTO investments, and investments in a cultural business (e.g., relating to film, video, books, music, magazines, newspapers, video games)).
  • If an investment is reviewable, an assessment is made by the government as to whether it is likely to be of “net benefit to Canada”.  If an investment does not meet the review threshold, a notification must be filed (although exemptions exist for several types of transactions).
  • The establishment of a new business in Canada is subject to notification, and generally not subject to review, though a discretionary review can be undertaken if the new business will carry on a cultural business.
  • All investments in Canada regardless of size or structure can be reviewed on a discretionary basis on national security grounds.
  • Different thresholds for review apply depending upon the type of transaction (i.e., private sector WTO investments, private sector trade agreement investments, state-owned enterprise WTO investments, non-WTO investments, and investments in a cultural business (e.g., relating to film, video, books, music, magazines, newspapers, video games)).

Things to do

Notification thresholds

Providing notice

  • If required, ensure that a notice of investment is filed not later than 30 days after closing of the acquisition or establishment of the new Canadian business.
  • Due to complexity, consider engaging Canadian counsel to assist in assessing your filing obligations and the preparation of any applicable filing.
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