The federal government today announced that it has approved CNOOC's acquisition of Nexen Inc. as well as Petronas' acquisition of Progress Energy Resources Corp. Both of these transactions involve proposed acquisitions of Canadian businesses by foreign state owned enterprises ("SOEs"). The Industry Minister determined that both transactions would be of "net benefit to Canada" as required by the Investment Canada Act (the "ICA") in light of the package of undertakings that were put forward by the SOE investors.
In addition to announcing that the transactions were approved, the government also released revisions to its SOE Guidelines, which describe how investments by SOEs will be reviewed under the ICA. Many of these changes better reflect the way that the review of acquistions by SOEs has evolved over the last 18 months. The revised guidelines stress, among other things, the importance of adhering to Canadian standards of corporate governance and free market principles. The revised guidelines specifically indicate that the ICA review will "also cover how and the extent to which the non-Canadian [SOE] is owned, controlled by a state or its conduct and operations are influenced by a state."
As well, the Prime Minister of Canada made an important statement that explains how the government intends to deal with acquisitions of Canadian businesses by foreign SOEs in the future. He made it very clear that the government will treat acquisitions by foreign SOEs very differently from acquisitions by private parties.
The net impact of these changes is that the government has made it more difficult for SOEs to acquire control of Canadian businesses, particularly in respect of investments in the oil sands. The Prime Minister stated that a future acquisition of control of a Canadian oil sands business by a foreign SOE would be approved under the ICA "on an exceptional basis only". Unfortunately, as yet there is no indication as to what could constitute "exceptional" circumstances.
For the main government statement, see http://news.gc.ca/web/article-eng.do?nid=711489. This article also contains further links of interest.