On December 7, 2012, the Canadian government approved two proposed investments in Canadian energy companies by state-owned enterprises (SOEs) under the Investment Canada Act (ICA): the proposed acquisition by PETRONAS of Progress Energy Resources Corp. (Progress) and the proposed acquisition of Nexen Inc. (Nexen) by China National Offshore Oil Company (CNOOC). Norton Rose Canada represented PETRONAS before the Investment Review Division of Industry Canada.

Concurrent with these announcements by the Minister of Industry, the government unveiled new guidelines applicable to future acquisitions of control of Canadian businesses by SOEs. However, the general test under the ICA remains –such acquisitions must be found “likely to be of net benefit to Canada.” In any case, acquisitions of control of Canadian businesses with asset book value of less than $330 million are not subject to review.

Click here for a legal update prepared by Kevin Ackhurst and John P. Carleton that reviews the two approvals, explains the new rules, and provides practical suggestions for investors—both SOEs and private sector investors— who may be faced with navigating the ICA in the future.