New Investment Canada Act thresholds

Following amendments to the ICA regulations that came into effect on April 24, 2015, there are 6 different thresholds for review of direct acquisitions of control of a Canadian business by a non-Canadian:

  1. Direct acquisition of a publicly-traded entity – $600 million or more in enterprise value, based on the target’s market capitalization, plus total liabilities (less operating liabilities), minus cash and cash equivalents.
  2. Direct acquisition of a privately-held entity – $600 million or more in enterprise value, based on the total acquisition value, plus total liabilities (less operating liabilities), minus cash and cash equivalents. Where acquiring less than 100%, total acquisition value will include amounts in addition to those payable by the non-Canadian acquiring control.
  3. Acquisition of assets – $600 million or more in enterprise value, based on the total consideration payable, plus the liabilities that are assumed by the investor (other than operating liabilities), minus the cash and cash equivalents that are transferred to the investor.
  4. Direct acquisition of a cultural business – book value of assets of Canadian business is $5 million or more.
  5. Direct acquisition by a non-WTO investor of a non-WTO controlled target – book value of assets of Canadian business is $5 million or more.
  6. Direct acquisition by a state-owned enterprise (“SOE”) – book value of assets of Canadian business is $375 million or more.

Direct acquisitions of Canadian businesses below the thresholds, and indirect WTO investments, including by SOEs, are subject to notification only; may be reviewed on national security grounds.

Indirect non-WTO investment or indirect investment in the cultural sector is subject to review where the book value of assets is $50 million or more (or $5 million in certain cases).

“Control” of corporations is deemed not to occur unless 1/3 or more of voting shares are acquired (subject to control in fact test for cultural businesses or SOE acquisitions). Control is presumed to be acquired for acquisitions of between 1/3 and a majority of voting shares, but this presumption can be rebutted if there is no control in fact. For non-corporate entities, control is acquired when a majority of voting interests is acquired, and no control is acquired when the voting interests acquired represent less than a majority.

National Security Regime – The government may review and prohibit any level of investment by a non-Canadian in a Canadian business if it determines that the investment may be “injurious to national security”.

Competition Act notification thresholds

Where both the Party Size and Transaction Type Thresholds are met, prior to closing the parties must either: (a) notify and observe the statutory waiting period; (b) obtain an advance ruling certificate (“ARC”); or (c) obtain a waiver from the notification provisions and a no-action letter.

Party Size Threshold – Parties to the transaction and their affiliates have aggregate book value of assets in Canada, or gross revenues from sales in, from or into Canada, in excess of $400 million.

Transaction Type Thresholds

Click here to view table

ARC – ARC may be issued where a transaction raises minimal or no substantive competition law issues and typically is issued within 2-3 weeks of an ARC request being made.Notification Timeline – The initial review period is 30 days. If during the initial review period the Competition Bureau issues a supplementary information request (“SIR”), akin to a US-style 2nd Request, the transaction cannot be completed until 30 days after compliance with the SIR.

Filing Fee – $50,000