Foreign investment regime
The stated purpose of the ICA is to review 'significant investments' by non-Canadians with a view to encouraging investment and economic growth, as well as to review investments by non-Canadians that 'could be injurious to national security'. The ICA applies when non-Canadians acquire existing Canadian businesses or establish new Canadian businesses.
The Minister of Innovation, Science and Economic Development (the Minister) is responsible for administering the majority of investments subject to the ICA, save for acquisitions or investments concerning 'cultural' businesses, which fall under the responsibility of the Minister of Canadian Heritage, as discussed in Section IV.iv.
There are two separate but interdependent regimes for review under the ICA – net benefit reviews, aimed at determining whether the proposed transaction is likely to be of net benefit to Canada, and national security reviews.i Net benefit reviews
Proposed transactions subject to the net benefit review provisions of the ICA are either notifiable or reviewable, depending on whether the applicable statutory financial threshold is met. When investments are considered notifiable, the foreign investor need only file a short notice of the transaction with the Director of Investments within 30 days of closing. In contrast, investments that are reviewable cannot be completed until the foreign investor has received, or has been deemed to receive, prior approval.
When a transaction is reviewable, the non-Canadian investor applies to the Investment Review Division (IRD) of Innovation, Science and Economic Development. The IRD is led by the Director of Investments, who is appointed by the Minister. It is the Director's duty to assist the Minister and make recommendations as to whether a proposed investment would be of net benefit to Canada. However, the Minister is not bound by the Director's recommendation and can approve or deny any investment. The Director and his or her officials are guided in assessing the net benefit of a transaction by a series of factors set out in the ICA, as discussed in Section IV.i. Consultations also occur with provincial governments affected by the proposed transaction, and with the Competition Bureau.ii National security reviews
All foreign investments in Canadian businesses may also be the subject of a national security review if the investment could be injurious to national security. The national security review provisions in the ICA do not specify threshold requirements based on the size of the transaction or the extent of the interest being acquired by the foreign investor. Accordingly, a national security review may be invoked in any transaction involving a non-Canadian investor in a Canadian business, even if the transaction is neither notifiable nor reviewable under the net benefit review provisions discussed above. The national security review framework is discussed further in Section IV.ii.iii Special rules for state-owned enterprises and cultural businesses
Special guidelines under the ICA also apply to investments by foreign state-owned enterprises (SOEs). These special guidelines are discussed in Section IV.vi. Similarly, transactions involving cultural businesses (e.g., those involved in the production or distribution of books, or film, audio and video products), for which the financial thresholds for review are substantially lower, are also subject to special rules, as discussed in Section IV.vi.