On April 18, 2020, the Minister of Innovation, Science and Industry released a policy statement announcing that certain foreign investments into Canada will be subject to enhanced scrutiny under the Investment Canada Act (the "Act"), in light of the evolving COVID-19 pandemic.In particular, the Government will scrutinize "foreign direct investment of any value, controlling or non-controlling, in Canadian businesses that are related to public health or involved in the supply or critical goods and services to Canadians or to the Government" [emphasis added].
In addition, the Government will also subject "all foreign investments by state-owned investors, regardless of their value, or private investors assessed as being closely tied to or subject to direction from foreign governments to enhanced scrutiny under the Act" [emphasis added.] Such enhanced measures may involve additional requests for information and extensions of timelines for reviews in order to ensure the Government can fully assess such investments.
The enhanced measures will continue to apply until "the economy recovers from the effects of the COVID-19 pandemic", which at this stage, remains to be seen.
These updates are particularly significant for transactions – regardless of value – involving the acquisition of a Canadian business by a non-Canadian entity that is a state-owned investor or a private investor closely tied to or subject to direction from a foreign government. For such transactions, application of the Act should be an important consideration at the earliest stages of transaction planning and transaction agreements should account for longer delays with appropriate protections built in. In addition, where a transaction involves a Canadian business "related to public health or the supply of critical goods and services to Canadians or the Government", parties should consider early engagement with the Investment Review Division of Innovation, Science and Economic Development Canada.
If you have questions about Canada's foreign investment laws and regulations, please reach out to a member of Fasken's Antitrust/Competition Marketing group. Our group has significant experience advising international and Canadian clients on all aspects of Canada's foreign investment regime.
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