Foreign investment is important to Canada's economic success as it can enhance economic growth, support new technologies, create good jobs for Canadians, and provide Canadian firms with access to global supply chains.
The Investment Canada Act (ICA or "the Act") is part of a broader framework to help Canada attract needed, positive foreign investment. That is, foreign investment that benefits our economy and that will not compromise national security.
The ICA allows the federal government to review significant in-bound foreign investments to ensure the overall economic benefit to Canada. It also allows the federal government to review investments of any size for national security concerns. The Act applies to a broad range of investments including acquisitions, greenfield and minority investments; however, only significant acquisitions of control of Canadian businesses are reviewed for their likely net benefit to the Canadian economy.
The legislation and associated rules are complex. The information provided below is intended to serve as an overview of the key features of the Act and to help investors and others who are interested to learn more. For the application of the Act to a specific situation, consult the provisions of the Investment Canada Act or contact us directly.
On this page
Administering the ICA
Innovation, Science and Economic Development Canada (ISED) is the department responsible for the overall administration of the Act. The Minister of Innovation Science and Industry (Minister of ISI), in consultation with the Minister of Public Safety, is responsible for conducting national security reviews and coordinating with investigative bodies. The Governor-in-Council (GiC) has the authority to order a national security review and to take any measures with respect to the investment.
With respect to investments related to cultural industries, the Department responsible for the administration of the Act is the Department of Canadian Heritage.
Who is subject to the ICA?
Non-CanadiansFootnote 1 who acquire control of an existing Canadian business or who wish to establish a new unrelated Canadian business are subject to the Act.
For the purposes of the ICA, an entity such as a corporation, government, partnership, trust or joint venture is considered a non-Canadian if it is not controlled or beneficially owned by Canadians.
Filing requirements
There are two types of mandatory filings under the ICA. An application for net benefit review must be submitted prior to the acquisition of control of a Canadian business valued above the applicable monetary threshold. By filing an application, the investor initiates the statutory timelines of the net benefit review process. An investment subject to net benefit review may not be implemented without the approval of the Minister of ISI.
An investment notification is required for transactions valued below the net benefit review threshold. A notification form must be filed each and every time a non-Canadian commences a new business activity in Canada and each time a non-Canadian acquires control of an existing Canadian business valued below the threshold. The notification must be filed no later than thirty days after the implementation of the investment.
The Minister issues Guidelines and Interpretation notes to assist investors in the interpretation of the terms "Acquisition of control", "Business", "Canadian Business" and "New Canadian business" as they are defined under the Act.
Reviews under the ICA
Net benefit review
The ICA allows the federal government to review high value acquisitions of control of Canadian businesses valued above the relevant threshold by foreign investors from a net benefit perspective. The net benefit review requires the proposed investment to be considered in light of the following factors:
- the investment's effect on the level and nature of economic activity in Canada, including employment, resource processing, and the utilization of parts, components and services;
- the degree and significance of participation by Canadians in the Canadian business;
- the investment's effect on productivity, industrial efficiency, technological development, and product innovation and variety;
- the investment's effect on competition;
- its compatibility with industrial, economic and cultural policies; and
- its contribution to Canada's ability to compete in world markets.
These six factors provide predictability for investors while maintaining flexibility for the Minister to ensure the overall economic benefit to Canada of investments.
In coming to a conclusion of net benefit, the Minister may consider all of the information available, including the application for review, plans and undertakings, additional information provided by the parties or relevant third-parties in the course of the review, and results of consultations with provincial and territorial governments.
National security review
The Act allows the federal government to conduct a national security review of any foreign investment, regardless of its value and whether it is subject to the mandatory filing requirements of the Act.
Investments not subject to mandatory filing requirements, such as minority investments, are also assessed for potential national security harm. The government relies on a variety of means to identify these investments, including referrals from security and intelligence agencies, news releases, media reports and commercial databases. These transactions are assessed for: 1) the applicability of the Act; and 2) potential for national security injury.
While the Minister of ISI is responsible for the administration of the national security review process, the review itself is a multi-step process led by Canada's national security agencies. The legal authorities under the Act to investigate an investment begin the moment the Minister becomes aware of an investment or a proposed investment. If each stage of the process is engaged, a national security review can last more than 200 days. The maximum timelines for each stage of the review are set out in in Figure 1.
Figure 1 – National Security Review Process Timeline
For each review, a thorough assessment of the investment is conducted, which includes looking at information and intelligence related to:
- the Canadian asset being acquired or business being established,
- the terms of the investment, and
- the foreign investor(s) and the potential for third-party influence.
A review may include consultation with Canada's allies, as well as requiring the parties to the transaction to provide any information necessary, such as the history of a transaction, the investor's existing presence in Canada, or their full corporate structure.
Based on a recommendation from the Minister of ISI, following consultation with the Minister of Public Safety, the Governor-in-Council (GiC) has the authority to take any measure necessary with respect to an investment. This can include:
- directing an investor not to implement an investment;
- authorizing an investment on the condition that the investor give certain written undertakings or on terms and conditions that the GiC considers necessary under the circumstances; or,
- requiring the investor to divest control of its investment.
The Guidelines on National Security Review of Investments provide guidance for investors and Canadians on how the government conducts the national security reviews. These guidelines provide an illustrative list of factors that the government takes into account in assessing the national security injury potential of an investment. The list of factors includes, for example:
- the potential of the investment to enable access to sensitive personal data;
- the potential effects of the investment on the transfer of sensitive technology or know how;
- the potential impact of the investment on critical minerals and critical mineral supply chains; and
- involvement by state-owned or state-influenced investors.
Confidentiality
All information received by ISED 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 ICA contains very rigid confidentiality provisions.
The confidentiality provisions are meant to encourage investors to share information with the appropriate ISED 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 inadequately communicated.
In addition to the restrictions on disclosure of information obtained under the ICA, the confidentiality provisions prohibit disclosure of the fact that a particular investment may or may not be under review, unless specific authorization is obtained from ISED officials.
For more information
To find out more information about the Investment Canada Act or filing requirements, please consult our frequently asked questions or contact us directly.