March 8, 2022 – Ottawa, Ontario
On February 24, 2022, President Putin launched an unprovoked and unjustifiable invasion of Ukraine. Russia’s continued attacks on Ukraine have created an environment of elevated national security and economic risk to Canada, including risks related to foreign direct investment in Canada with ties to Russian entities and/or Russian investors.
This elevated risk environment will directly affect both net benefit reviews and national security reviews under the Investment Canada Act (ICA).
Net benefit reviews
Under the ICA, the burden of proof is on foreign investors to convince the Minister that a proposed acquisition of control of a Canadian entity above the relevant value threshold is likely to be of net benefit to Canada. For the purposes of reviewing such investments by direct or indirect Russian investors, under this policy the Minister of Industry (or the Minister of Canadian Heritage, as regards investments in Canada’s cultural sector) will find the acquisition of control of a Canadian business to be of net benefit to Canada on an exceptional basis only.
Each case will continue to be examined on its own merits, considering the specific factors under section 20 of the ICA and relevant previously issued guidelines.
National security reviews
With respect to national security reviews, should it be determined that an investment, regardless of its value, has ties, direct or indirect, to an individual or entity associated with, controlled by or subject to influence by the Russian state, this will support a finding by the Minister that there are reasonable grounds to believe that the investment could be injurious to Canada’s national security as set out in Part IV.1 of the Investment Canada Act.
This is in addition to the enhanced scrutiny that is already applied under the revised National Security Guidelines announced in March 2021.
Planning for Investment Filings
In light of this policy, the Government of Canada recommends that all non-Canadian investors and Canadian businesses carefully review their investment plans to identify any potential connections to Russian investors and entities that may be involved in both controlling and minority investments.
Non-Canadian investors are asked to pro-actively identify any components of proposed transactions subject to review under the Act that have ties to Russia, including indirect entities or individuals.
The required additional due diligence outlined in this policy may require lengthy review periods. Reviews may involve requirements to submit detailed information setting out corporate data, structures and financing relationships, including for direct and indirect investors, beneficial ownership and trusts. Non-Canadian investors and Canadian businesses are therefore recommended to consider the role Russian entities and individuals with ties to Russia may have in potential investments as part of their investment planning considerations.
This policy under the ICA is applicable during this period of escalated risks of national security and economic injury associated with Russia’s unprovoked attacks on Ukraine and until further notice.
The Investment Review Division of Innovation, Science and Economic Development Canada may be reached at:
Cultural Sector Investment Review of Canadian Heritage may be reached at: