CANADA Law and Practice Contributed by: Grant McGlaughlin, Sean Stevens and Claire Gowdy, Fasken
Foreign Investments Pursuant to the ICA, the acquisition of control by a non-Canadian of a Canadian business is either review- able or notifiable depending on several factors, includ - ing the structure of the transaction, the nationality of the investor, and the nature and value of the assets or business being acquired. In summary, the direct acquisition of control of a Canadian business by a non-Canadian is subject to pre-closing review where one of the following thresh - olds is exceeded: • CAD1.386 billion in enterprise value for a direct acquisition of control of a Canadian non-cultural business by a WTO investor that is not a foreign state-owned enterprise (SOE); • CAD2.079 billion in enterprise value for a direct acquisition of control of a Canadian non-cultural business by a “trade agreement investor” (ie, an investor from a country with which Canada has a trade agreement, such as the USA or the EU) that is not a foreign SOE; • CAD551 million in asset value for a direct acquisi - tion of control of a Canadian non-cultural business by a foreign SOE controlled by a WTO member state; • CAD5 million in asset value for a direct acquisition of control of a Canadian non-cultural business by a non-WTO investor; and • CAD5 million in asset value for a direct acquisition of control of a Canadian cultural business. Indirect acquisitions of control of a Canadian non-cul - tural business by a WTO investor are not subject to pre-closing review, regardless of size. In contrast, indi - rect acquisitions of control of a Canadian non-cultural business by a non-WTO investor are subject to pre- closing review where the book value of the Canadian business’s assets is at least CAD50 million. A transaction that is subject to pre-closing review can - not be completed unless the Canadian government is satisfied that the investment is likely to be of “net ben - efit to Canada”. The government’s net benefit analysis takes into account a number of factors, including: (i) the effect the investment is likely to have on employ - ment, resource processing, the utilisation of parts
various settings, including with employees, in contrac - tual undertakings, and on websites and advertising. Securities Regulators Canada has no federal securities law or regulator. Securities laws are covered by ten provincial and three territorial regulators, although the applicable authori - ties are generally substantially equivalent in regulating securities matters across the country. Competition Act The Competition Act prescribes a “transaction size” threshold, a “party size” threshold and, in the case of transactions involving the acquisition of voting shares, a “shareholding” threshold for acquisitions of operat - ing businesses with assets in Canada. If all of these thresholds are exceeded, a transaction is considered “notifiable” and, subject to certain limited excep - tions, triggers a pre-merger notification filing. Trans - actions exceeding such thresholds cannot close until notice has been provided and the statutory waiting period has expired or has otherwise been terminated or waived. For the purposes of both the “transac - tion size” and “party size” thresholds, asset values are calculated having regard to the book value of the assets in Canada rather than the fair market value of the assets in Canada. In 2025, the “transaction size” threshold requires the value of assets in Canada of the target (or, in the case of an asset purchase, the value of assets in Canada being acquired) or the gross revenues from sales in, from or to Canada generated by those assets to exceed CAD93 million. The “party size” threshold requires the parties to a transaction, together with their affiliates, to have aggregate assets in Canada or annual gross revenues from sales in, from or into Canada that exceed CAD400 million. The “sharehold - ing threshold” requires the acquiror to hold at least a prescribed percentage of the target’s voting shares. In the case of private companies, the threshold is more than 35% (or more than 50% if the 35% threshold is already exceeded). In the case of public companies, the threshold is more than 20% (or more than 50% if the 20% threshold is already exceeded).
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