Canada FDI control
Produced in partnership with Davies Ward Phillips & Vineberg LLP
Canada FDI control

The following Competition practice note produced in partnership with Davies Ward Phillips & Vineberg LLP provides comprehensive and up to date legal information covering:

  • Canada FDI control
  • General overview of the Investment Canada Act regime
  • 1. Have there been any recent developments regarding the Canadian FDI control regimes and are any updates/developments expected in the coming year? Are there any other ‘hot’ FDI control issues in Canada?
  • 2. What is the control test and what is the position in relation to 'minority shareholdings'?
  • 3. Are joint ventures caught by the FDI regime (including non-structural, cooperative joint ventures)?
  • 4. What are the notification thresholds and would a purely foreign-to-foreign transaction be caught (commenting on any ‘effects’ doctrine/policy if relevant)?
  • 5. Are there any specific issues parties should be aware of when compiling and calculating the relevant turnover for applying the jurisdictional thresholds?
  • 6. Where the jurisdictional thresholds are met, is notification mandatory and must closing be suspended pending clearance?
  • 7. Is there any discretion to review transactions that fall below the notification thresholds?
  • 8. Is it possible to close the deal globally prior to local clearance?
  • More...

A conversation with Mark Katz, partner at Canadian law firm Davies Ward Phillips & Vineberg LLP, on key issues on foreign direct investment (FDI) merger control in Canada under the Investment Canada Act.

General overview of the Investment Canada Act regime

The Investment Canada Act (the ICA) authorises the Canadian government to review certain investments by non-Canadians in Canadian businesses and, where considered appropriate, to either prohibit these investments from proceeding or order investments to be unwound or divestitures made.

There are two key aspects to ICA review:

  1. the ‘net benefit review’ process, and

  2. the ‘national security review’ process.

Pursuant to the net benefit review process, a non-Canadian proposing to acquire control of a Canadian business (including a business in Canada owned by a foreign entity), and whose acquisition exceeds certain thresholds, must satisfy the government that its investment will be of net benefit to Canada. Although the ICA sets out various factors to be considered in this regard, the decision is largely discretionary and will depend on the type and quality of commitments (undertakings) that the non-Canadian investor is prepared to provide the Canadian government with respect to the conduct of the Canadian business post-investment. Typical undertakings relate to the role of Canadian management; employment; and investments in the Canadian business, such as for capital expenditures and research and development.

In addition to net benefit review, the ICA

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