An Overview of the Investment Canada Act (FAQs)
Note: This document is not intended to provide legal advice. Investors and their representatives are urged to contact Investment Review Division officials directly at 343-291-1887 for more detailed information.
The purposes of the Investment Canada Act (the Act) are "to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada and to provide for the review of investments in Canada by non-Canadians that could be injurious to national security." (s. 2). The legislation and associated rules are complex and because of that complexity, this document is intended to serve both as an introduction to and a description of the key features of the Act. It is intended to help investors and others who are interested in the application of the legislation understand how non-Canadian investors are to respond to the requirements of the Act.
It should be noted, however, that this is only a general guide for the reader. It does not include all the details found in the Act and is not intended to express a legal opinion of the Government of Canada as to the interpretation of the Act nor is the Government bound by its content. For the application of the Act to a particular situation, the reader is advised to consult the specific provisions of the Act and obtain appropriate legal counsel.
With respect to all investments except those that fall within a prescribed type of business activity as set out in Schedule IV of the Regulations, the Department responsible for the administration of the Act is Innovation, Science and Economic Development Canada. With respect to investments which fall within a Schedule IV prescribed business activity, the Department responsible for the administration of the Act is the Department of Canadian Heritage.
For further information on investments other than Schedule IV investments, please call 343-291-1887 or contact us by fax at 343-291-2469, or by letter addressed to:
Investment Review Division
235 Queen Street,
Room 400B East Tower,
Ottawa, Ontario, K1A 0H5
For further information on Schedule IV investments, please call 819-994-5569 or contact the Department of Canadian Heritage by fax at 819-994-5408, or by letter addressed to:
Department of Canadian Heritage
Cultural Sector Investment Review
25 Eddy Street, 7th Floor, Suite 216
Gatineau, Quebec K1A 0M5
What's Covered in the FAQs
- Does the Investment Canada Act apply to me?
- When do I have to file a Notification?
- When will an investment be subject to net benefit review?
- When should I file a Voluntary Notification?
- How is the enterprise value of assets calculated?
- How do I know which Department will review my investment?
- How long does the review process take?
- When is Investment Review Branch open?
- Can I implement an investment that is subject to review prior to a decision?
- What does "net benefit" mean?
- What happens if the Minister is not satisfied of "net benefit" and does not approve the investment?
- Binding Opinions
- Third Party Representations
- The government does not usually disclose information regarding ICA national security decisions. Why the change?
- For More Information
Does the Investment Canada Act apply to me?
If you are not a Canadian citizen or a permanent resident, within the meaning of the Immigration and Refugee Protection Act (i.e., a person who has been ordinarily resident in Canada for not more than one year after the time at which he/she first became eligible to apply for Canadian citizenship), then you are a non-Canadian and must comply with the provisions of the Investment Canada Act.
For the purposes of the Act, a non-Canadian includes any entity that is not controlled or beneficially owned by Canadians.
If you are a non-Canadian and you propose to establish a new Canadian business or to acquire an existing Canadian business, then you must either file a Notification or an Application for Review of the investment unless a specific exemption applies (s.10).
When do I have to file a Notification?
If you are a non-Canadian then you must file a notification each and every time you commence a new business activity in Canada and each time you acquire control of an existing Canadian business where the establishment or acquisition of control is not a reviewable transaction.
A Notification must be filed no later than thirty days after the implementation of the investment.
When will an investment be subject to net benefit review?
It is recommended the application filing should be made at least 75 days prior to a planned implementation or commercial closing, to allow for the full regulatory time period for review. Note that standard practice is that filings received after 5pm are deemed received the next business day.
When should I file a Voluntary Notification?
Investments described in section 25.1(c) are subject to national security review. The government has up to five years after the implementation of such an investment to make an Order for national security review under section 25.3. An investor may wish to attain regulatory certainty by filing a voluntary notification, triggering the same statutory deadlines as a mandatory filing.
Investors are strongly encouraged, particularly where they are state-owned or subject to state-influence, or in cases where the factors listed in the Guidelines on the National Security Review of Investments may be present, to file a notification, whether voluntary or mandatory, at least 45 days prior to planned implementation, and at least 75 days prior to commercial closing where an application of net benefit review is required.
Investment Review Division officials are available to discuss your investment proposals and to answer questions about which filing may be required.
How is the enterprise value of assets calculated?
In general, for acquisitions of control of a Canadian business that is publicly traded, the enterprise value of the assets is calculated as the market capitalization of the entity, plus its total liabilities excluding its ordinary course liabilities, minus the entity's cash and cash equivalents.
The enterprise value for a Canadian business that is not publicly traded is calculated as its total acquisition value, plus its total liabilities excluding its ordinary course liabilities, minus its cash and cash equivalents.
The enterprise value of a Canadian business that is acquired through an asset acquisition is calculated as its total acquisition value, plus the assumed liabilities, minus its cash and cash equivalents. These are determined based on the transaction documents that are used to implement the investment.
For specific details consult sections 3.3, 3.4 and 3.5 of the Investment Canada Regulations.
How do I know which Department will review my investment?http://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/h_lk00007.html#q6
How long does the review process take?
Every effort is made to process applications for review as quickly as possible. Under the Act, the Minister has 45 days to determine whether or not to allow the investment. The Minister can unilaterally extend the 45 day period by an additional 30 days by sending a notice to the investor prior to the expiration of the initial 45 day period. Further extensions are permitted if both the investor and the Minister agree to the extension. If no approval or notice of extension is received within the applicable time then the investment is deemed approved. It is not unusual for the Minister to extend the initial 45 day review period by an additional 30 days to permit full consideration of the investment. In the case of investments in cultural businesses, the review will usually require at least 75 days to complete (ss.21, 22, 23).
When is Investment Review Branch open?
The Investment Review Branch general inbox (email@example.com) and phone line (1-343-291-1887) is typically monitored from 9am to 5pm, Monday to Friday. Where possible, filings should be submitted within these hours, or certification of completeness may be delayed. Given the transactional nature of the work and the strict, statutory deadlines, however, staff may be in a position to receive submissions or send notices outside normal business hours.
Investment Review Branch is not open on holidays*. When an investor is required to make a filing or other submission, or is to receive a notice or other response, on a holiday, that filing or sending of notice can occur on the next business day.
Note: * Holidays include: Saturdays, Sundays, New Year’s Day, Good Friday, Easter Monday, Victoria Day, Canada Day, Civic Holiday, Labour Day, National Day for Truth and Reconciliation, Thanksgiving Day, Remembrance Day, Christmas Day and Boxing Day. Furthermore, if New Year’s Day, Canada Day, National Day for Truth and Reconciliation or Remembrance Day occur on a weekend, the following Monday is a holiday; if Christmas Day occurs on a Friday, the following Monday is a holiday; and, if Christmas Day occurs on a weekend, the following Monday and Tuesday are a holiday.
Can I implement an investment that is subject to review prior to a decision?
Generally, a reviewable investment may not be implemented prior to the investor having received a decision from the Minister that the investment is of "net benefit" to Canada. There are three exceptions:
- Where the Minister is satisfied that a delay in implementing the investment would result in undue hardship to the investor or would jeopardize the operations of the Canadian business and the Minister has sent a notice to the investor permitting implementation of the investment prior to completion of the review process;
- Where the investment is implemented as the result of an acquisition of control of a corporation incorporated outside of Canada. Pursuant to Canada's international commitments, indirect acquisitions by or from WTO investors are not reviewable; and
- Where the investment is not normally reviewable, but the Government exercises its authority by Order-in-Council to review the investment because the investment involves a Schedule IV business activity (cultural heritage or national identity).
What does "net benefit" mean?
In determining whether an investment is of "net benefit", the Minister will consider the following factors:
- the effect on the level of economic activity in Canada, on: employment, resource processing, the utilization of parts and services produced in Canada, and exports from Canada;
- the degree and significance of participation by Canadians in the Canadian business or new Canadian business and in any industry or industries in Canada;
- the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;
- the effect of the investment on competition within any industry in Canada;
- the compatibility of the investment with national industrial, economic and cultural policies; and
- the contribution of the investment to Canada's ability to compete in world markets.
The investor should address each of these factors and provide supporting documentation and financial data when submitting an application for review. Depending upon the nature of and the circumstances surrounding the investment, some of the above factors will be given more weight than others. The more specific the investor's plans and/or undertakings which address the above factors, the greater the likelihood a speedy approval will be obtained.
What happens if the Minister is not satisfied of "net benefit" and does not approve the investment?
If the Minister advises that he/she is not satisfied that the investment represents a "net benefit" to Canada, the Act provides an opportunity for the investor to make additional representations and undertakings which would demonstrate the "net benefit" of the investment. Ultimately, if the Minister remains unsatisfied, a notice will be sent to the investor advising of the Minister's decision and the investor will be prohibited from implementing the investment or if the investment has already been implemented the investor will be required to divest itself of the investment (ss. 23, 24).
An investor may seek an opinion from the Minister or Director of Investments with respect to any matter of interpretation of the Investment Canada Act. Once an opinion is provided the opinion is binding upon the Minister and the Director for so long as the material facts on which the opinion was based remain substantially unchanged. Opinions are generally sought in respect to the status of an individual or entity as a Canadian, general questions of interpretation, and whether or not there are grounds for an early implementation of the investment (s. 37).
Third Party Representations
While other federal government departments and provincial governments are regularly consulted during the review process, representations are not solicited from any other persons. However, where unsolicited representations are received that could have an adverse bearing on the determination of net benefit, applicants will be advised of the substance of those representations and given an opportunity to respond to them. The identity of persons making third party representations will not be disclosed to the applicant. Information provided to the Government by the applicant will not be divulged to a third party intervenor without the consent of the applicant.
Where relevant to the factors used in the determination of net benefit, the Minister will be advised both of any outside representations made with respect to an investment and of any response to those representations made by the applicant.
The Investment Canada Act contains very rigid confidentiality provisions. All information received by Industry Canada and its officials in relation to an investor or a Canadian business is treated as privileged and confidential information and may not be disclosed except in relation to the administration of the Act or with the consent of the parties to whom the information pertains. The confidentiality provisions are meant to encourage investors to share information with the appropriate Industry Canada officials to make the review process more efficient for all parties and to allow a provider of information to be secure in the knowledge that the sensitive business information provided will not be misused or indiscreetly communicated.
The government does not usually disclose information regarding ICA national security decisions. Why the change?
The recent announcement of three final orders made under section 25.4(1) of the ICA is a change in procedure as the government has traditionally not publicly divulged decisions of this nature, despite having the authority to do so. This change is part of overall efforts to modernize and improve the administration of Canada’s investment review regime. For greater transparency, such decisions will continue to be announced going forward, along with net benefit review decisions which were always disclosed. The decisions page on this website is updated regularly.
For More Information
Further information may be obtained by contacting:
Innovation, Science and Economic Development Canada, Investment Review Division in Ottawa at 343-291-1887
Or you may write to us at:
235 Queen Street, Room 400B East Tower
C.D. Howe Building