In our June 1, 2016 post, I reported that I had recently obtained, as a result of an access to information request made in 2013, information from the Canadian government regarding the number of notices and orders issued under national security provisions of the Investment Canada Act (ICA) for the period April 1, 2009 to March 31, 2013.
Late last week, Canada released its Investment Canada Act Annual Report for fiscal year 2015–16 (Annual Report) which for the first time includes information on the administration of the national security provisions of the ICA. This information while limited in scope provides a more complete picture of Canada’s use of its discretionary national security review powers under the ICA.
Under the ICA, investments in Canada by non-Canadians are screened for national security issues. This process is undertaken in cooperation with Canada’s national security agencies. If the initial screening indicates that a more detailed review is required, the ICA provides for a national security review to be ordered by the Governor-in-Council (GIC) on the recommendation of the Minister of Innovation, Science and Economic Development, after consultation with the Minister of Public Safety and Emergency Preparedness.
Since the national security provisions in the ICA came into force in 2009, the Annual Report states that the GIC has ordered a total of 8 national security reviews, broken down by year as follows:
Click here to view table.
Given that, during the same time period, 4,359 notifications and 112 applications were filed by non-Canadians under the ICA (as well as there being numerous additional transactions by non-Canadians which did not require either notifications or applications but would have been subject to potential national security reviews under the ICA), 8 transactions represents a very small percentage of foreign investments with a Canadian connection that have attracted formal action by the Canadian government under the national security provisions of the ICA. This latest information confirms our earlier conclusion, based on the limited disclosure resulting from the access to information request, that since the coming into force of its national security review powers in 2009 the Canadian government has only made limited use of these powers to challenge proposed and completed transactions.As a result of those 8 GIC mandated reviews, the non-Canadians in three of the transactions were ordered not to implement their transactions. In two other transactions, the non-Canadians were ordered to divest of the Canadian businesses that they had acquired. However, two of the reviewed transactions were permitted to proceed subject to conditions which “mitigated the identified national security risks”. The one other transaction was abandoned prior to a GIC order being made.