Notification under the Investment Canada Act
The Investment Canada Act (ICA) governs foreign investment in Canada. Its primary purpose is to ensure that such investments benefit Canada. The ICA distinguishes between direct investments and indirect investments. This explanation focuses primarily on direct investments requiring notification.
A key element of the ICA is the requirement for certain foreign investors to file a notification with the Investment Review Division (IRD) of Innovation, Science and Economic Development (ISED) Canada. This notification is required before or, in some cases, after the investment is implemented. The specific obligations depend on the size and nature of the investment, and the investor’s country of origin.
Who Needs to Notify? Generally, a notification is required when a non-Canadian acquires control of a Canadian business. Control, for the purposes of the ICA, is generally defined as acquiring a majority of the voting shares of a corporation, or a majority of the ownership interests in any other type of business. Even acquiring a significant minority interest can be considered control if, in practice, the investor gains the ability to direct the strategic direction of the Canadian business.
Thresholds and Exceptions: There are thresholds that determine when a notification is required. Below these thresholds, no notification is needed. The thresholds are dependent on the type of investor, and the type of transaction. For example, investments by World Trade Organization (WTO) investors are subject to higher thresholds than those from non-WTO investors. The thresholds are typically adjusted annually to reflect changes in Canada’s gross domestic product. Furthermore, investments in certain types of businesses, such as those related to cultural heritage or national security, may be subject to different rules and review procedures.
Notification vs. Review: It is important to distinguish between a notification and a review. Notifications are generally straightforward administrative processes. The IRD acknowledges the notification and confirms it meets the necessary requirements. A review, on the other hand, is a more in-depth assessment of the investment’s likely impact on Canada. Only certain investments above the applicable threshold are subject to review.
Information Required in a Notification: The notification form requires detailed information about the investor, the Canadian business being acquired, and the nature of the transaction. This information includes: the investor’s identity and ownership structure, details of the Canadian business (e.g., its activities, financial performance, and employees), and information about the financing and planned operations post-acquisition.
Timing of the Notification: In many cases, the notification can be filed after the investment has already been implemented (post-closing notification). However, in certain situations, particularly when national security concerns might be present, the notification must be filed before the investment is implemented (pre-closing notification). Failure to comply with the notification requirements can result in penalties, including fines and the possibility of the investment being disallowed.
National Security Review: Regardless of the value or nature of the investment, the Minister of Innovation, Science and Economic Development has the power to review any investment that could be injurious to Canada’s national security. This review can be triggered even if the investment is below the threshold requiring a standard notification or review. The national security review process can be lengthy and complex, and often involves consultation with various government agencies.
Conclusion: Navigating the ICA’s notification requirements can be complex. Foreign investors contemplating an investment in a Canadian business should carefully review the applicable rules and thresholds, and seek legal advice to ensure compliance with the Act.
280×200 canadian merger notification investment canada act review from mcmillan.ca 
848×300 investment canada act competition act mandatory review thresholds from www.bennettjones.com 
500×614 competition act investment canada act merger thresholds blg from www.blg.com 
1900×500 competition act investment canada act review thresholds from www.bennettjones.com 
1024×302 competition act investment canada act thresholds canadian ma from www.canadaregulatoryreview.com 
1900×500 canadian competition act investment canada act merger review from www.bennettjones.com 
300×199 higher investment canada act competition act thresholds from www.deallawwire.com 
638×359 state owned enterprises soes investment canada act from www.slideshare.net