The second half of 2012 saw the most significant political debate in Canada on foreign investment in a generation. The CNOOC/Nexen and the Petronas/Progress transactions in the Canadian oil patch caused the government to review its guidelines on how it will evaluate proposed acquisitions of Canadian businesses by foreign investors and, in particular, state-owned entities (SOEs).

The revised guidelines and the government's announced policy as it relates to SOE investment in Canada continue to allow the government much flexibility in its decision-making process as it relates to such investors. What is clear for SOEs is that:

  • investments in Alberta's oil sands will be permitted only in exceptional circumstances;
  • the review threshold for SOEs will remain at C$330 million indexed annually; and
  • other investments will be reviewed more carefully, both on a company and industry basis, including a determination of the potential for a foreign state to exercise control or influence on the SOE making the proposed Canadian investment.

However, minority investments and investments in joint ventures by SOEs are being encouraged and remain non-reviewable in most circumstances.

Foreign investors other than SOEs can look forward to the threshold for review being raised initially to C$600 million and eventually to C$1 billion (enterprise value) at some point in 2013 – although this higher threshold has been promised by the government for several years. Both SOEs and all other foreign investors seeking to make an investment that is subject to review will continue to have to pass the nebulous 'net benefit' test in order to obtain approval.1

For further information on this topic please contact Colin P MacDonald at Borden Ladner Gervais LLP's Calgary office by telephone (+1 403 232 9500), fax (+1 403 266 1395) or email ( Alternatively, please contact Jeffrey S Thomas in Borden Ladner Gervais LLP's Vancouver office by telephone (+1 604 687 5744), fax (+1 604 687 1415) or email


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