Tag archives: Investment Canada Act

2020 merger review thresholds for Competition Act and Investment Canada Act

The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have now both been released for 2020. The Commissioner of Competition announced on April 1 that the threshold would remain the same as in 2019.

Competition Act

Canada uses a two-part test for determining whether a pre-merger notification is necessary. The two-part test is based on the size of the parties and the size of the transaction. The transaction size component can be adjusted annually for inflation. Under the size of the parties test, … Continue Reading

2019 merger review thresholds for Competition Act and Investment Canada Act

The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2019.

Competition Act

Canada uses a two-part test for determining whether a pre-merger notification is necessary. The two-part test is based on the size of the parties and the size of the transaction. The transaction size component can be adjusted annually for inflation. Under the size of the parties test, the parties, together with their affiliates, must have aggregate assets in Canada or annual gross revenues from sales in, from … Continue Reading

Foreign investment laws and increased scrutiny of M&A transactions

2018 is on pace to be a year with one of the highest total values of blocked or cancelled M&A deals in the past two decades. While this data, which was compiled by Thomson Reuters and reported by the Financial Times, is based on public M&A transactions, the reasons and insights behind it can nonetheless be applied to the private M&A context.

One of the main ways that deals have been blocked is through foreign investment laws. These laws take different forms in different countries but examples include the Investment Canada Act or the Committee on Foreign Investment in … Continue Reading

2018 merger review thresholds for Competition Act and Investment Canada Act

The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2018.

Competition Act

Canada uses a two-part test for determining whether a pre-merger notification is necessary. The two-part test is based on the size of the parties and the size of the transaction. The transaction size component can be adjusted annually for inflation. Under the size of the parties test, the parties, together with their affiliates, must have aggregate assets in Canada or annual gross revenues from sales … Continue Reading

Investment Canada Act update: new thresholds and national security in the news

Threshold now $1 billion

As a result of recent amendments, most direct acquisitions of control of a Canadian company now only require prior approval of the Minister of Innovation, Science and Economic Development under the Investment Canada Act if the enterprise value of the Canadian business exceeds $1 billion.  That is expected to reduce the number of transactions that will require a foreign investor to persuade the Minister that the deal is likely to be net benefit to Canada before it can be completed.

As outlined in an earlier post, under amendments to the Investment Canada Act first introduced … Continue Reading

National security guidelines shed light on Investment Canada review process

On December 19, 2016, the Government of Canada issued long-sought guidelines to help foreign investors and their advisors understand the national security review process under the Investment Canada Act (ICA). Following amendments to the ICA in 2009 the government has had the explicit authority to review investments in Canadian businesses by non-Canadians to determine whether they “could be injurious to national security,” a term that was not defined in either the statute or the accompanying regulations.

Given the subject matter, both the previous and current governments have maintained that they are often constrained in what they can tell foreign investors … Continue Reading

2015 reform of Investment Canada Act now paying dividends in form of inward foreign direct investment

As we await Q3 statistics on Canada’s inward and outward foreign direct investment (FDI), the rebounding numbers in Q1 and Q2 have represented a step in the right direction. FDI is a macroscopic measure of private investment (in contrast to portfolio investment) and includes among other types of investment, mergers and acquisitions. The rebounding comes after a 2015 Q4 that saw inward FDI dip below $5 billion for the first time since 2011, while setting a historical high of $22.4 billion earlier that year in Q2. Strong inward FDI figures from Q3 will likely strengthen Canada’s attractiveness as … Continue Reading

New merger review thresholds for Competition Act and Investment Canada Act

The threshold for a pre-closing net benefit review under the Investment Canada Act and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2015.

Investment Canada Act

The direct acquisition of control of a Canadian business by a non-Canadian from a WTO-member country is subject to pre-closing review and approval where the assets of the acquired business had a net book value of more than $369 million as at the end of the target’s last completed fiscal year prior to the acquisition. The 2014 threshold was $354 million. Amendments to the ICA to change … Continue Reading

Doing business in Canada: M&A considerations

canadian-flag-on-buildingCanada is a top destination for foreign companies and investors attracted to our wealth of natural resources, stable and sound political and financial systems, and world-class infrastructure. While Canada is an open economy and welcoming of foreign investment, there are issues that corporations and investors should keep in mind when doing business in Canada. Norton Rose Fulbright’s guide, Doing Business in Canada, provides a general overview of the principal corporate, tax and other legal considerations that would be of interest to foreign businesses wishing to establish or acquire a business in Canada.

Of particular interest in the M&A context, … Continue Reading

Canada blocks telecom deal for national security reasons

The Canadian government has used the Investment Canada Act to block the proposed acquisition of the Allstream division of Manitoba Telecom Services Inc. by Accelero Capital Holdings for national security reasons.  On October 7, 2013, the Minister of Industry, James Moore, issued a brief statement in which he noted:

MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada.

No further details or reasons were provided.

This represents at least the second transaction to have been blocked for national security reasons by the Canadian government under Prime Minister … Continue Reading

Doing business in Canada – Competition and foreign investment laws

The federal Competition Act sets out a framework to promote and maintain fair competition and applies to Canadians and non-Canadians alike.

canadian-flag-on-building

The chapter on Competition and Foreign Investment Laws (pdf 186kb) in our guide to Doing business in Canada addresses sections of the Competition Act relevant to an acquirer of an existing Canadian business, and also speaks to practical considerations, confidentiality and regulation of anti-competitive practices.

In addition, the chapter considers the applicability of the Investment Canada Act in M&A transactions and, more specifically, what constitutes a reviewable or notifiable transaction thereunder.

In light of recent changes to the Investment Continue Reading

Amendments to Investment Canada Act intended to increase transparency

On April 27, 2012, the federal government announced it would amend the Investment Canada Act to allow the Minister of Industry greater flexibility in explaining why a proposed foreign takeover of a Canadian business raises preliminary concerns.  The amendments, contained in the government’s annual budget bill, will also empower the Minister to accept offers of security as a performance guarantee.

Canada’s foreign investment regime requires that any acquisition of control of a Canadian business by a non-Canadian, where the book value of the assets of the Canadian business exceeds a prescribed threshold (currently C$330 million), be reviewed and approved … Continue Reading

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