Canadian Going Private Transactions: Regulatory Approvals – ICA Part II (National Security)

See Chinese version below [中文版参阅下文].

This is the second of a two part series on the potential application of the Investment Canada Act to transactions involving Canadian businesses.  Part II focuses on the national security provisions in the Investment Canada Act.

The National Security Regime in the Investment Canada Act

In addition to the potential requirement to obtain pre-closing approval by the Minister of Innovation, Science and Industry (the “Minister”) for direct acquisitions of control of a Canadian business, the Investment Canada Act also prescribes a national security review process. This process allows the Minister to review, on national security grounds, any direct or indirect equity or asset investment (including minority investments) involving a Canadian business or entity, or the establishment of a new Canadian business or entity, by a non-Canadian. If it finds that it is advisable to protect national security, the government may block a proposed investment, allow an investment with conditions, or order the divestiture of an implemented investment.

Ordinarily, the Minister’s right to order a national security review applies from when he becomes aware of a transaction until 45 days after the application or notification filing is made. Where a transaction is not subject to a filing requirement (i.e., because the investment does not involve an acquisition of control or establishment of a new Canadian business), the Minister can order a national security review at any time from when he becomes aware of the transaction until 45 days after closing. An investor is not under any obligation to otherwise notify the Minister about such an investment, and this is not changed by the new policy.

Covid-19: Enhanced Review Measures

Given the decline in value of many Canadian businesses since March 2020, along with the newly-recognized importance of certain businesses to Canada’s ability to combat the pandemic and to ensure a continued supply of products and services essential to Canadians and the government, the Minister determined that enhanced review measures under the ICA are necessary to guard against potentially harmful or opportunistic foreign investments, especially in critical industries.

There have been two policy changes.

First, on April 18, 2020, the Minister issued a new policy statement relating to foreign investment screening in the circumstances of COVID-19. Under the new policy, the Governmen of Canada will subject certain investments by non-Canadians in Canadian businesses and entities, and the establishment of new Canadian businesses and entities, to enhanced scrutiny under the Investment Canada Act. The policy purports to apply to investments in Canadian businesses “related to public health or involved in the supply of critical goods and services to Canadians or to the Government”, but does not define or describe what businesses fall under the scope of “public health” or “critical goods and services”. In this respect, the policy (intentionally) applies broadly. The policy also sets out enhanced measures applicable to investments made by state-owned enterprises (“SOEs”) or investors working under the influence or direction of a foreign government. The Government’s enhanced scrutiny is in line with similar approaches to foreign investment taken by a number of other countries.

The Minister will use his powers under the national security provisions to enforce these enhanced review measures.  The policy does not have a set end date, other than purporting to apply “until the economy recovers from the effects of the COVID-19 pandemic”.

Second, on July 31, 2020, the Minister issued a Ministerial Order under the Time Limits and Other Periods Act (COVID-19), extending certain periods relating to the national security review process under the Investment Canada Act.  In particular, the federal government now has 60 days (increased from 45 days) to decide whether to issue a national security notice or to make a national security order without first issuing a national security notice.  The time limits for the review of a transaction on national security grounds have also been extended.

The extended time periods mean that a national security review now may take up to 260 days; previously, the statutory maximum was 200 days (in each case subject to further extension on consent of the investor). 

Foreign investors should consider these twin Covid-19 developments carefully.  They impact both: (a) the likelihood of foreign investments in certain sectors of the Canadian economy being subject to national security review by the federal government; and (b) the anticipated length of a review if one is ordered. 

Further information on the enhanced measures and extended time periods is available on the blog of our Competition/Antitrust & Foreign Investment group:


监管机构的批准 -《加拿大投资法》国家安全审查机制第二篇




通常,部长有权下令对国家安全进行审查,从部长了解交易开始到申请或通知备案后45天为止。 如果交易不受备案要求的限制(即,由于投资不涉及获得控制权或建立新的加拿大业务),则部长可以下令从他知道到交易情况到交割后45天的任何时间进行国家安全审查。投资方没有义务以其他方式通知部长有关此类投资,新政策也不会改变。




部长将根据国家安全规定行使权力,以执行这些强化的审查措施。 该政策没有确定结束日期,只是声称“直到经济从COVID-19疫情的影响中恢复过来”。

其次,部长于2020年7月31日根据《时限和其他期限法》(COVID-19)发布了一项部长令,延长了与《加拿大投资法》规定的国家安全审查程序有关的某些期限。 特别是,联邦政府现在有60天(原为45天)来决定是否发布国家安全通知或发布国家安全令,而无需先发布国家安全通知。 以国家安全为由审查交易的时限也已延长。

延长时间段意味着国家安全审核现在最多可能需要长达260天; 之前的法定最长时限为200天(在各种情况下,均须经投资者同意后进一步延长期限)。

外国投资方应仔细考虑以上两个有关Covid-19的政策变更。 它们均对以下两个方面同时产生影响:(a)在加拿大经济某些领域的外国投资受到联邦政府国家安全审查的可能性; (b)如已下达命令,则预计进行的审查时间会延长。




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