On April 26, 2012 the Minister of Finance, Jim Flaherty, introduced the budget implementation legislation, Bill C-38—the Jobs, Growth and Long-term Prosperity Act—which provides for significant amendments to federal legislation in line with the objectives set out in the government’s 2012 Budget Plan.
In addition to the government’s budget implementation measures, Bill C-38 includes proposed changes to the Investment Canada Act designed to increase transparency in the foreign investment review process while preserving commercial confidentiality for investors supplying information under the Act. The proposed amendments will also authorize the Minister of Industry to accept security for payment of any penalties ordered by a court as a result of any contravention of the Act, including breach of undertakings given by a foreign investor to secure approval of investments under the Act.
The following includes a summary of the key amendments as they relate to specific sections of the Act:
- Section 19 will be amended to allow the government to accept security in respect of any future failure by a foreign investor to abide by undertakings made pursuant to the Act. Such a contravention currently carries a maximum penalty of $ 10,000 per day of contravention.
Subsection 36(4) will be amended to allow for the disclosure of:
- Information relating to the Minister’s acceptance of a security provided under the proposed amendment to section 19 of the Act.
- Information in any notice sent to an investor approving an investment as being of net benefit to Canada;
- Information in a notice and in reasons provided to an investor under section 23(1) of the Act indicating that the Minister is not satisfied that an investment will be of net benefit to Canada (such satisfaction on the Minister’s part being necessary for implementation of a reviewable transaction under the Act), and giving an investor 30 days to make representations and submit undertakings in that regard.
- Proposed Subsection 36(4.1) will include a provision requiring the Minister to inform investors before communicating any information permitted to be disclosed under subsection 36(4), and preventing such disclosure if they satisfy the Minister, without delay, that the communication or disclosure would prejudice them.
The practical effect of the transparency amendments is that the Minister will have the ability to publicly disclose the information contained in any notice sent to investors indicating: (i) that the Minister is (or is not) satisfied that an investment will be of net benefit to Canada; (ii) the reasons provided to an investor explaining why the Minister is not satisfied that an investment will be of net benefit to Canada; and (iii) information relating to the Minister’s acceptance of a security provided under the proposed amendment to section 19 of the Act.