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An Overview of the Investment Canada Act (FAQ)

Note: This document is not intended to provide legal advice. Investors and their representatives are urged to contact Investment Review officials directly for more detailed information.

INTRODUCTION

The purpose of the Investment Canada Act (the Act) is "to provide for the review of significant investments in Canada by non-Canadians in order to ensure such benefit to Canada" (s. 2). The legislation describing the "review function" and associated rules are complex and because of that complexity, this document is intended to serve both as an introduction to and a description of the key features of the Act. It will hopefully help investors and others who are interested in the application of the legislation understand how non-Canadian investors are to respond to the requirements of the Act.

It should be noted, however, that this is only a general guide for the reader. It does not include all the details found in the Act and is not intended to express a legal opinion of the Government of Canada as to the interpretation of the Act nor is it bound by its content. For the application of the Act to a particular fact situation, the reader is advised to consult the specific provisions of the Act and obtain appropriate legal counsel.

With respect to investments which do not fall within a prescribed type of business activity that is related to Canada's cultural heritage or national identity, the Department responsible for the administration of the Act is Industry Canada. With respect to investments which do fall within a prescribed type of business activity that is related to Canada's cultural heritage or national identity, the Department responsible for the administration of the Act is the Department of Canadian Heritage. To view which activities are related to Canada's cultural heritage or national identity, please see Schedule IV of the Investment Canada Regulations and use the Back button of your browser to return here. .

For further information on investments which do not fall within a prescribed specific type of business activity that is related to Canada's cultural heritage or national identity, please call (613) 954-1887 or contact us by facsimile at (613) 996-2515, or by letter addressed to: 235 Queen Street, Room 301B East Tower, Ottawa, Ontario, K1A 0H5

Email: investcan@ic.gc.ca

For further information on investments which do fall within a prescribed specific type of business activity that is related to Canada's cultural heritage or national identity, please call (819) 997-4492 or contact the Department of Canadian Heritage by facsimile at (819) 994-9744, or by letter addressed to: Department of Canadian Heritage, Cultural Sector Investment Review, Cultural Affairs Sector, 6th Floor, 15 Eddy Street, 15-6-K, Hull, Quebec, K1A 0M5

Email: carla_curran@pch.gc.ca

What's Covered in this FAQ




Does the Investment Canada Act apply to me?

If you are not a Canadian citizen or a permanent resident, within the meaning of the Immigration Act (ie. a person who has been ordinarily resident in Canada for not more than one year after the time at which he/she first became eligible to apply for Canadian citizenship), then you are a non-Canadian and must comply with the provisions of the Investment Canada Act.

For the purposes of the Act, a non-Canadian includes any entity that is not controlled or beneficially owned by Canadians.

If you are a non-Canadian, then you MUST either file a Notification or an Application for Review of the investment unless a specific exemption applies. (s.10)

When do I have to file a Notification?

If you are a non-Canadian then you must file a notification each and every time you commence a new business activity in Canada and each time you acquire control of an existing Canadian business where the establishment or acquisition of control is not a reviewable transaction.

A Notification must be filed no later than thirty days after the implementation of the investment.

When will an investment be reviewable?

1.An investment is reviewable if there is an acquisition of a Canadian business and the asset value of the Canadian business being acquired equals or exceeds the following thresholds:

2. Notwithstanding the above, any investment which is usually only notifiable, including the establishment of a new Canadian business, and which falls within a specific business activity listed in Schedule IV of the Regulations Respecting Investment in Canada, may be reviewed if an Order-in-Council directing a review is made and a notice is sent to the Investor within 21 days following the receipt of a certified complete notification.

What is a cultural business?

The Investment Canada Act defines a cultural business as a business carrying on ANY of the following activities:

How long does the review process take?

Every effort is made to process applications for review as quickly as possible. Under the Act, the Minister has 45 days to determine whether or not to allow the investment. The Minister can unilaterally extend the 45 day period by an additional 30 days by sending a notice to the investor prior to the expiration of the initial 45 day period. Further extensions are permitted if both the investor and the Minister agree to the extension. If no approval or notice of extension is received within the applicable time then the investment is deemed approved. It is not unusual for the Minister to extend the initial 45 day review period by an additional 30 days to permit full consideration of the investment. In the case of investments in cultural businesses, the review will usually require at least 75 days to complete. (ss.21, 22, 23)

Can I implement an investment that is subject to review prior to a decision?

Generally, a reviewable investment may not be implemented prior to the investor having received a decision from the Minister that the investment is of "net benefit" to Canada. There are three exceptions:

1. Where the Minister is satisfied that a delay in implementing the investment would result in undue hardship to the investor or would jeopardize the operations of the Canadian business and the Minister has sent a notice to the investor permitting implementation of the investment prior to completion of the review process;

2. Where the investment is implemented as the result of an acquisition of control of a corporation incorporated outside of Canada; and

3. Where the investment is not normally reviewable, but the Government exercises its authority by Order-in-Council to review the investment because the investment is in a cultural industry.

What does "net benefit" mean?

In determining whether an investment is of "net benefit", the Minister will consider the following factors:

The investor should address each of these factors and provide supporting documentation and financial data when submitting an application for review. Depending upon the nature of and the circumstances surrounding the investment, some of the above factors will be given more weight than others. The more specific the investor's plans and/or undertakings which address the above factors, the greater the likelihood a speedy approval will be obtained.

What happens if the Minister is not satisfied of "net benefit" and does not approve the investment?

If the Minister advises that he/she is not satisfied that the investment represents a "net benefit" to Canada, the Act provides an opportunity for the investor to make additional representations and undertakings which would demonstrate the "net benefit" of the investment. Ultimately, if the Minister remains unsatisfied, a notice will be sent to the investor advising of the Minister's decision and the investor will be prohibited from implementing the investment or if the investment has already been implemented the investor will be required to divest itself of the investment. (ss. 23, 24)

Binding Opinions

An investor may seek an opinion from the Minister or Director of Investments with respect to any matter of interpretation of the Investment Canada Act. Once an opinion is provided the opinion is binding upon the Minister and the Director for so long as the material facts on which the opinion was based remain substantially unchanged. Opinions are generally sought in respect to the status of an individual or entity as a Canadian, general questions of interpretation, and whether or not there are grounds for an early implementation of the investment. (s. 37)

Third Party Representations

While other federal government departments and provincial governments are regularly consulted during the review process, representations are not solicited from any other persons. However, where unsolicited representations are received that could have an adverse bearing on the determination of net benefit, applicants will be advised of the substance of those representations and given an opportunity to respond to them. The identity of persons making third party representations will not be disclosed to the applicant. Information provided to the Government by the applicant will not be divulged to a third party intervenor without the consent of the applicant.

Where relevant to the factors used in the determination of net benefit, the Minister will be advised both of any outside representations made with respect to an investment and of any response to those representations made by the applicant.

Confidentiality

The Investment Canada Act contains very rigid confidentiality provisions. All information received by Industry Canada and its officials in relation to an investor or a Canadian business is treated as privileged and confidential information and may not be disclosed except in relation to the administration of the Act or with the consent of the parties to whom the information pertains. The confidentiality provisions are meant to encourage investors to share information with the appropriate Industry Canada officials to make the review process more efficient for all parties and to allow a provider of information to be secure in the knowledge that the sensitive business information provided will not be misused or indiscretely communicated.

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