Guidelines on the National Security Review of Investments

March 24, 2021 – Ottawa, Ontario

Paragraphs 10, 12, 13 – August 2, 2022

  1. The following Guidelines are issued under section 38 of the Investment Canada Act ('the Act') by the Minister of Innovation, Science and Industry ('the Minister'), who is the Minister responsible for the administration of the Act. These Guidelines inform investors of procedures that will be followed in the administration of the national security review process set out in Part IV.1 of the Act and in the National Security Review of Investments Regulations ('the Regulations'). It is recommended that investors and Canadian businesses take account of the national security review provisions, the Regulations and these Guidelines in their business planning and communications. The national security review process is separate from the net benefit review process conducted by the Minister or Minister of Canadian Heritage under Part IV of the Act.
  2. Section 25.1 of the Act identifies the scope of investments by non-Canadians, whether implemented or proposed, that may be subject to national security review under Part IV.1. These are: the establishment of a new Canadian business or an entity carrying on operations in Canada; acquisitions of control of a Canadian business of any dollar value; and acquisitions of all or part of an entity carrying on operations in Canada.
  3. The Minister, in consultation with the Minister of Public Safety and Emergency Preparedness, is responsible for referring investments that could be injurious to national security to the Governor in Council, who may order a review. The Investment Review Division of Innovation, Science and Economic Development is the interface with investors and other parties to the investment before a national security review is ordered and throughout the review process. The national security review process is supported by Public Safety Canada and Canada's security and intelligence agencies and other investigative bodies prescribed in the Regulations. Information obtained in administering the Act is shared with these bodies and protected by them as required by the Act and other applicable laws.
  4. Under Part IV.1 of the Act, proposed or implemented investments are evaluated on the basis of the facts related to the investment, which may include sensitive information, including as defined in section 38 of the Canada Evidence Act. Investors and the other parties involved in an investment that is, or may be, subject to a national security review under section 25.3 are notified in a timely manner as required by the Act and the Regulations. If an order for review of an investment is made by the Governor in Council, the Act provides the opportunity for the non-Canadian or other parties to make representations to the Minister. Throughout this process, commercial information is protected by the strict confidentiality provisions contained in the Act. Sensitive information is protected under the Canada Evidence Act and other applicable laws. National security considerations may restrict the degree to which the Government can share information with the investor and others in this context.
  5. Following a review, and within the time period set out in the Regulations, the Minister, after consultation with the Minister of Public Safety and Emergency Preparedness, will either refer the investment to the Governor in Council, along with a report on the review and recommendations, or, if satisfied that the investment would not be injurious to national security, notify the non-Canadian that no further action will be taken. On referral of an investment, the Governor in Council has the authority to take any measures with respect to the investment that he or she considers advisable to protect national security, including to:
    • authorize the investment on condition that the non-Canadian: give any written undertakings considered necessary; or, implement specified terms and conditions;
    • disallow the investment; or,
    • require the investor to divest control of the Canadian business or its investments in an entity.
  6. In assessing proposed or implemented investments under the national security provisions of the Act, the nature of the assets (including intangible assets) or business activities and the parties involved in the transaction, including the ultimate controller and potential for third party influence, are considered.
  7. In particular, some investments into Canada by state-owned enterprises may be motivated by non-commercial imperatives that could harm Canada's national security. The Government will subject all foreign investments by state-owned investors, or private investors assessed as being closely tied to or subject to direction from foreign governments, to enhanced scrutiny under Part IV.1, regardless of the value of the investment.
  8. For the purposes of making determinations under Part IV.1 of the Act, the Minister or Governor in Council may take into account factors including but not limited to the following as they relate to national security:
    1. The potential effects of the investment on Canada's defence capabilities and interests, including but not limited to the defence industrial base and defence establishments;
    2. The potential effects of the investment on the transfer of sensitive technology or know-how outside of Canada, including consideration of whether the investment provides access to information not in the public domain related to the research, design or manufacture of sensitive technologies. Sensitive technology areas include those that have military, intelligence or dual military/civilian applications. Such technologies may be developed in multiple fields, including, but not limited to those listed at Annex A. The list at Annex A may be updated periodically in accordance with the evolution of technologies, the military and intelligence applications of technology, and national security imperatives;
    3. Involvement in the research, manufacture or sale of goods/technology identified in Section 35 of the Defence Production Act;
    4. The potential impact of the investment on the supply of critical goods and services to Canadians, or the supply of goods and services to the Government of Canada;
    5. The potential impact of the investment on critical minerals and critical mineral supply chains. For more information, please consult the Government of Canada’s Critical Minerals List;
    6. The potential impact of the investment on the security of Canada's critical infrastructure. Critical infrastructure refers to processes, systems, facilities, technologies, networks, assets and services essential to the health, safety, security or economic well-being of Canadians and the effective functioning of government. For more information on Canada's critical infrastructure, see National Strategy for Critical Infrastructure and Action Plan for Critical Infrastructure;
    7. The potential of the investment to enable foreign surveillance or espionage;
    8. The potential of the investment to hinder current or future intelligence or law enforcement operations;
    9. The potential impact of the investment on Canada's international interests, including foreign relationships;
    10. The potential of the investment to involve or facilitate the activities of illicit actors, such as terrorists, terrorist organizations, organized crime or corrupt foreign officials; and,
    11. The potential of the investment to enable access to sensitive personal data that could be leveraged to harm Canadian national security through its exploitation, including, but not limited to:
      1. personally identifiable health or genetic (e.g., health conditions or genetic test results);
      2. biometric (e.g., fingerprints);
      3. financial (e.g., confidential account information, including expenditures and debt);
      4. communications (e.g., private communications);
      5. geolocation; or,
      6. personal data concerning government officials; including members of the military or intelligence community.
  9. Investments that do not possess any of the above-listed characteristics may nevertheless present national security concerns where the investment would be injurious to Canada’s national security.
  10. The Act requires non-Canadian investors to file an application for net benefit review for investments subject to section 14 of the Act prior to their implementation. For investments described in section 25.1(a) or (b), non-Canadian investors are required to notify the Minister, either before or within the 30 days following the implementation of the investment. A voluntary notification may be filed for investments described in section 25.1(c), all of which are nonetheless subject to the established national security review process as set out in the Regulations. If no filing is made for investments under section 25.1(c), the Minister has five years after the implementation of an investment to refer an investment to the Governor in Council for an order for national security review under section 25.3.
  11. An investment subject to a national security review after it has been implemented can be unwound if the Governor in Council makes an Order directing the non-Canadian to divest itself of its investment or conditions could be imposed on it by Order of the Governor in Council.
  12. Investors are strongly encouraged, particularly where they are state-owned or subject to state-influence, or in cases where the factors listed in paragraph 8 of these Guidelines may be present, to contact the Investment Review Division at the earliest stages of the development of their investment projects to discuss their investment and 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 for net benefit review is required.
  13. If the Investment Review Division becomes aware of a situation where it believes an application for net benefit review or a notification has not been properly filed, pursuant to sections 17 and 12 of the Act respectively, it may contact the non-Canadian to advise them of their obligations under the Act. The Act provides the Minister the authority to require that this information be provided. In situations where an application for net benefit review or a notification are not required, the Investment Review Division may also contact the non-Canadian to discuss the possibility of a voluntary filing or the reviewability of the investment under section 25.1(c). The Act also provides the Minister the authority to require that information be provided in order to determine whether there are reasonable grounds to believe an investment could be injurious to national security. In some cases, the Investment Review Division may, pursuant to subsection 25.2(3) of the Act, request information from non-Canadians and/or parties involved in proposed or implemented investments by a non-Canadian for this purpose. Investors are encouraged to respond to such information requests without delay.
  14. In all cases, Investment Review Division officials are ready to meet with investors about their investment projects. Such consultations may facilitate assessments under Part IV.1 and clarify information requirements that might be useful in the course of assessments.

ANNEX A – Sensitive Technology Areas

The following is a non-exhaustive list of technology areas that may be considered sensitive for the purposes of review under the national security provisions of the Investment Canada Act.

  • Advanced Materials and Manufacturing
  • Advanced Ocean Technologies
  • Advanced Sensing and Surveillance
  • Advanced Weapons
  • Aerospace
  • Artificial Intelligence (AI)
  • Biotechnology
  • Energy Generation, Storage and Transmission
  • Medical Technology
  • Neurotechnology and Human-Machine Integration
  • Next Generation Computing and Digital Infrastructure
  • Position, Navigation and Timing (PNT)
  • Quantum Science
  • Robotics and Autonomous Systems
  • Space Technology

This list may be updated periodically as necessary.