On November 1, 2016, the Honourable William Morneau, Canada’s Minister of Finance, tabled his government’s Fall Economic Statement. Included in the Statement was a commitment by the Liberal Government to ensure that Canada makes the most of every opportunity to attract global investment.

Since his election in 2015, Prime Minister Justin Trudeau has indicated both in his public statements and in his actions that his government is more open to foreign investment than the government of former Prime Minister Stephen Harper. In furtherance of that openness, a new federal body, the Invest in Canada Hub, is to be created to coordinate Canada’s investment promotion activities and the number of trade commissioners will be increased in markets that are considered strategic to Canada.

The Investment Canada Act is federal legislation that requires any non-Canadian proposing to directly acquire control of a Canadian business that exceeds a prescribed monetary threshold to obtain government approval before proceeding with its investment. In 2009, the Harper Government amended that legislation to create an additional review power in respect of foreign investments that appear to raise national security concerns. Unfortunately, the government provided no insight or explanation as to how the new national security review power would be used in practice. Subsequent exercises of that power to block a number of transactions have not resulted in a much better understanding as to the circumstances in which this power will be invoked. This situation has resulted in considerable uncertainty in the minds of foreign investors contemplating potential investments in Canada.

As part of the Statement, the Minister of Finance announced that, before the end of the current calendar year, his government will publish informational guidelines explaining the circumstances under which foreign investments will be examined under the national security review provisions. It is hoped that this increase in transparency as to how the review process works in the context of national security reviews will attract desirable foreign investments in Canada by providing foreign investors with a better understanding as to exactly what types of investments will be subjected to nation security review attention. The new guidelines hopefully will also assist foreigners to better navigate the Investment Canada Act review process thereby encouraging foreign investment in Canada while at the same time ensuring the ongoing integrity of Canada’s national security processes