Pursuant to section 25.3(1.1) of the Investment Canada Act (the Act), the Minister of Industry (the Minister) is to impose interim conditions in respect of an investment where, after consultation with the Minister of Public Safety (the Minister of PS), the Minister is satisfied that such interim conditions are necessary to prevent national security injury that could arise during the review period and that the imposition of the interim conditions does not introduce significant new risks of national security injury. Furthermore, the Minister is to delete interim conditions when satisfied, after consultation with the Minister of PS, that the interim condition is no longer necessary.
The following provides information to investors, Canadian businesses, and vendors regarding how this provision will be administered.
General
Interim conditions will be imposed when necessary for the purpose of preventing injury that may arise during the pendency of a national security review. Such conditions will be determined on a case-by-case basis in light of the specific facts and risks associated with an investment.
Process
The Minister will consider whether interim conditions are necessary with respect to the investment based on the information available at that time. In order to fully inform the decision, requests for information may be sent to the investor, the Canadian business and/or the vendor. An initial request for information will be sent as early as feasible and, in any event, prior to the Minister making an order for further review referred to in subsection 25.3(1) of the Act. In order to efficiently advance the review, the relevant party(ies) are expected to respond, in writing, within five business days of receipt of the questions.
A ministerial order imposing interim conditions, if any, would be delivered to the investor and any other relevant party(ies) along with the notice referred to under subsection 25.3(2) (the Notice). The Notice will be accompanied by a summary of the national security concerns related to the investment (the Summary of Concerns), including those supporting the imposition of interim conditions.
Affected party(ies) will be entitled to make representations regarding any interim conditions, should they wish to do so. The representations may be made in writing or in person, at the affected party's preference and should be delivered no later than the date of the representations meeting, which will be scheduled no later than 10 business days following receipt of the Notice. These timelines reflect the short statutory timeframes for the review process and the need for officials to assess the information and materials shared. While the affected party(ies) may provide representations at later times, it cannot be guaranteed that these will benefit from the above.
If, as a result of new information obtained during the review or representations made by the affected party, the Minister is satisfied – after consultation with the Minister of PS – that new interim conditions, amended conditions, or the deletion of existing conditions is appropriate, the affected party would receive a subsequent notice referred to in subsection 25.3(2) and a new ministerial order, if necessary.
Content of Representations
An affected party electing to make representations should refer to the Summary of Concerns in their representations to address, among any other matters, the validity of the concerns, the necessity of specific conditions, and the impact of conditions on its day-to-day business operations or the ability to ultimately conclude the investment if permitted. When warranted, representations proposing alternative conditions that minimize the impact will be considered.
Timing Considerations
The ministerial order imposing the conditions will set out the period during which they will apply. In all cases, the conditions will expire no later than the sending of a notice under paragraph 25.3(6)(b) or (c) of the Act, or an order made by the Governor in Council under subsection 25.4(1) of the Act. In the event of a notice issued under paragraph 25.3(6)(c) or an order made under subsection 25.4(1), the undertakings or the order, as the case may be, may include conditions similar to the interim conditions that would otherwise expire.
Examples
Interim conditions will be tailored to the potential national security injury presented by the investment that could arise during the review, and could include measures such as, but not limited to:
- Governance:
- Restricting the investor's rights to appoint board members and senior management
- Temporarily suspending the investor's voting rights
- Operations:
- Restricting information sharing between the Canadian business and the investor
- Separation of communications systems, access controls, etc.
- Restricting workforce integration
- Restricting physical access to sensitive locations
- Prohibiting or suspending contracts with the investor
- Requiring continued supply of critical goods or services to the Government or other party
- Restricting information sharing between the Canadian business and the investor
- Monitoring:
- Reporting obligations
- Requiring inspections
Monitoring and Enforcement
Investors, Canadian businesses and vendors are required to fully comply with all interim conditions imposed by ministerial order. Failure to comply may result in enforcement action taken under Part VII of the Act, including seeking significant financial penalties per day of the contravention.
Terms with respect to monitoring of compliance will be set out in the ministerial order imposing the interim conditions. These may include periodic reporting, site visits, and engaging of third-party monitors, among other measures.
In addition, given that the purpose of interim conditions is to prevent possible injury to Canada's national security during the review period, a breach or breaches of interim conditions may result in the Minister making a negative inference regarding the investment. This may result in a referral to the Governor in Council for a final decision, with the breach(es) being considered when the Minister forms their recommendation to the Governor in Council.
Future updates
This administrative note will be reviewed within six months of its initial issuance and thereafter annually. If necessary, this note will be revised to reflect developed practice in order to ensure transparency for Canadians and non-Canadians regarding the administration and enforcement of interim conditions.