Dealmakers warn Ottawa's proposed foreign-investor rules could stymie tech startups – The Logic

Chad Bayne

Dec 14, 2022

Proposed amendments to the Investment Canada Act regarding foreign investment in certain sectors deemed to be sensitive to national security could limit the ability of technology companies to raise crucial capital, say investors and transaction lawyers. If Bill C-34 passes, international entities would be required to notify the government before closing deals in industries like critical minerals and technologies like AI and robotics, which could then become subject to national security reviews, extending deal timelines.

Osler partner Chad Bayne, Co-Chair, Emerging and High Growth Companies, spoke to The Logic about the effect the proposed rules could have on Canada’s tech landscape.

“Right now, there is no real process — it’s very opaque,” Chad says about the current procedure. The government will actually increase clarity around pre-notification requirements and timelines once it publishes its list of affected sectors.

A majority of foreign investment in Canadian technology companies comes from the U.S. and other allies, an essential source of funding for the industry, but the federal government doesn’t plan on exempting them from the new rules.

Restricting the flow of international money, Chad says, would be “a detriment to our industry here [because] there is just not enough capital in Canada to fund these companies.”

“It definitely will slow down the ability for companies to raise money.”

You can read the full article, “Dealmakers warn Ottawa's proposed foreign-investor rules could stymie tech startups,” on the National Post website.