At present, foreign ownership rules for telecom carriers may be summarized as follows:
- at least 80% of the members of the board of directors of the carrier must be Canadian;
- non-Canadians may not beneficially own, directly or indirectly, more than 20% of the carrier's voting shares;
- non-Canadians may not beneficially own directly or indirectly more than 33 1/3% of the voting shares of the carrier's holding company; and
- the carrier or the holding company may not otherwise be controlled by non-Canadians (i.e., "control in fact").
Since the focus of these requirements is voting shares, foreign investors often seek to maximize ownership through non-voting securities. So long as the 20% limit at the carrier level and 33 1/3% limit at the holding company level for non-Canadian ownership of voting shares are respected, the question of compliance shifts to whether the carrier’s ownership structure satisfies the highly fact-specific “control in fact” test. In December 2009, Industry Minister overturned a ruling by the Canadian Radio-television and Telecommunications Commission on Globalive, by ruling that start-up mobile operator met Canadian ownership and control requirements under the Telecommunication Act. The minister decided that Globalive – 65% owned by Egypt’s Orascom Telecom but technically meeting legal requirements on the basis of Canadian-held voting shares – did not need to make any changes to its ownership structure.
There is a general sense that it is only a matter of time before the rules are relaxed, at least in the cellular sector. In 2008, the Competition Policy Review Panel recommended reducing or eliminating foreign ownership restrictions for network infrastructure-based operators.
In a television interview following the Throne Speech, Industry Minister confirmed the government's desire to liberalize foreign ownership restrictions in the telecom sector. Asked how it will happen and when we will see details, the minister said that the government is in the process of examining the necessary legislative changes and that people should "stay tuned."