Annual Report 2009–2010 (lk81129)

1. Introduction

The Investment Canada Act (ICA or the Act) is Canada's primary mechanism for reviewing foreign investments. It applies to every sector of the economy in which a foreign investor can acquire control of a Canadian business. The purpose of the Act, as stated in section 2, is twofold:

• Recognizing that increased capital and technology benefits Canada and recognizing the importance of protecting national security, the purposes of this 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.

The ICA came into force on June 30, 1985, replacing the Foreign Investment Review Act. From 1985 to 1995, the ICA was administered by the Investment Canada Agency. The Agency, in its role as administrator of the Act, was also mandated to promote foreign investment in Canada. In 1995, the Agency was dissolved and its responsibilities were transferred to Industry Canada. Responsibility for promoting foreign investment has since been transferred to Foreign Affairs and International Trade Canada. In 1999, authority for the administration of the Act as it relates to the acquisition of control of cultural businesses was transferred to the Minister of Canadian Heritage. In February 2009, the Act was amended to provide for the review of investments that could be injurious to Canada's national security.^{Footnote 1}

This report has been prepared in compliance with section 38.1 of the ICA, which requires the Director of Investments to submit a report on the administration of the Act, other than Part IV.1 Investments Injurious to National Security, to the Minister for each fiscal year and which requires the Minister to make the report available to the public.^{Footnote 2} The report provides information on the administration of the ICA (except for cultural businesses) for the period from April 1, 2009, to March 31, 2010 (the 2009-10 fiscal year). It includes information on the level and nature of foreign investments that were subject to the Act during the 2009-10 fiscal year. The report is structured as follows:

• Section 2 provides information on key features of the Act and its administration. This includes information on how the Act applies to foreign investments, the net benefit factors, national security reviews, timelines for reviews, the confidentiality provisions of the Act, the consultation process for net benefit reviews, and the Investment Review Division that assists the Minister in administering the Act.
• Section 3 addresses recent policy developments relating to the Act. This section includes recent initiatives to address the issue of state-controlled investment, the government's response to the Competition Policy Review Panel, subsequent amendments to the Act and new national security regulations.
• Section 4 provides statistical information on recent investment activity, with a particular focus on investment activity under the Act, i.e., investments to acquire control of Canadian businesses and to establish new businesses, including applications and notifications, for the 2009-10 fiscal year. Also covered are the enforcement proceedings involving the United States Steel Corporation (U.S. Steel).
• Section 5, the Appendix, provides notes on data interpretation for the statistics related to the administration of the Act.