Following its approval in December 2012 of two high-profile transactions involving foreign state-owned enterprises acquiring Canadian businesses, the Canadian government announced new policies that would guide the minister of industry in applying the Investment Canada Act (ICA) to subsequent similar transactions.  On April 29, 2013, the government introduced its budget implementation bill, Bill C-60, which contains amendments to the ICA to implement the December 2012 policies. If enacted in their current form, these amendments will provide the minister greater authority to require net benefit reviews as well as the ability to prolong reviews of transactions that may raise national security concerns.

Given that the ICA review process has been criticized as insufficiently transparent, the changes that may result from Bill C-60 will only increase the uncertainty associated with the review process. To properly assess the regulatory risk of a transaction, parties should have clear guidance on what constitutes a state-owned enterprise.  The amendments broaden the definition and empower the minister to declare that an entity is controlled in fact by an SOE, potentially subjecting transactions that previously would not have been subject to review to such a review.

For more information about the implications of Bill C-60, please see our recent Legal Update.