CANADA Law and Practice Contributed by: Kevin West, Andrea Hill, Priya Ratti and Gabriel Potkidis, SkyLaw
Separately, the ICA allows the government to conduct a national security review of any foreign investment (whether implemented or proposed, and including minority investments) and of any establishment of a new Canadian business by a non-Canadian, regard - less of its value and whether it is subject to a net ben - efit review. There is no definition of “national security” in the ICA, and the government make take a variety of factors into account. Any foreign investments in businesses involved in the Canadian critical minerals sector, defence, sensitive technology, and certain other protected industries are likely to be subject to greater scrutiny. In particular, the government has stated that: • any investments by an entity owned or influenced by a foreign state into Canada’s critical minerals sector, and any determination that a foreign inves - tor has ties to Russia, will support a finding that the investment could be injurious to national security; and • acquisitions of control of Canadian firms engaged in critical minerals operations will be found to be of net benefit to Canada only in the most exceptional of circumstances. The government is also more likely to take a closer look at predatory acquisitions which could be harmful to the Canadian economy or Canadian workers. Minority investors may make a voluntary pre-closing filing to determine if their proposed investment would be subject to a national security review, triggering a 45-day review period for the government. If no vol - untary notification is filed, the government has up to five years after the implementation of the investment to make an order for a national security review. The national security review provisions can apply to acqui - sitions even where there is a limited connection to Canada. Sanctions Canada has sanctioned countries, individuals and entities that it considers to be connected to human rights violations, corruption, or terrorist activities. Canada currently has sanctions in place against 24 countries. Sanctions can permit Canada, among oth -
er things, to impose restrictions on trade, freeze or restrain the property of officials and politicians, and require disclosure and/or divestiture of assets in sanc - tioned jurisdictions. Industries with Limits on Foreign Ownership Ownership by non-Canadians is restricted in certain sectors, including the airline, banking, telecommuni - cations and insurance industries. The government has imposed a temporary ban (with some exceptions) on foreign ownership of Canadian non-recreational resi - dential property, which is currently set to expire on 1 January 2027. Foreign investments into businesses operating in certain industry sectors will be subject to heightened scrutiny under the ICA. These include firms working with technology identified on the government’s Sen - sitive Technology List, businesses with assets in the interactive digital media sector, and companies in the defence and critical minerals industries. 2.4 Antitrust Regulations Competition Act Foreign investment is also subject to pre-merger noti - fication under the Competition Act if it meets both of the following thresholds: • Size of Parties: The parties to the transaction, together with their affiliates, have combined assets in Canada or total annual gross revenues from sales in, from or into Canada with a value in excess of CAD400 million; and • Size of Transaction: The aggregate value of the Canadian assets or annual gross revenues from sales in or from Canada of the target exceed CAD93 million. The Competition Bureau reserves the right to review any transaction. Under the Competition Act, the Com - petition Bureau has up to three years post-closing for transactions that are not notifiable, and one year for notifiable transactions to determine whether it is likely to lessen or prevent competition substantially. In addi - tion, all business activity in Canada is subject to scru - tiny for anti-competitive behaviour.
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