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 by the Minister of Industry before closing.  The Minister must determine the transaction is likely to result in a “net benefit” to Canada, based on a number of factors contained in the Act.  In the 26-year history of the Act, governments have used it only twice to block transactions:  once in 2008 when Aliant Techsystems tried to buy MacDonald Dettwiler & Associates Ltd.’s aerospace business, and then in 2010 when BHP Billiton sought to acquire Potash Corporation.