Wednesday January 31 2018

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: Canada




Non-Canadians who acquire control of an existing Canadian business or who wish to establish a new unrelated Canadian business are subject to the Investment Canada Act, and they must submit either a Notification or an Application for Review.

On 30th January 2018, the Government of Canada published the anticipated new threshold for State-owned enterprise WTO investments.

[restrict …]Pursuant to the subsections 14.1(1.1) and (2) of the Investment Canada Act, it is expected that the review threshold for 2018 will be $398 million in asset value for investments to directly acquire control of a Canadian business by:

  1. WTO investors that are state-owned enterprises; and
  2. non-WTO investors that are state-owned enterprises where the Canadian business that is the subject of the investment is, immediately prior to the implementation of the investment, “controlled by a WTO investor”.

The official threshold will be published in the Canada Gazette in early 2018.

This threshold will be annually revised to reflect the change in Canada’s nominal gross domestic product (GDP) in accordance with the formula set out in subsection 14.1(2) (i.e., the annual change in nominal GDP at market prices multiplied by the threshold amount determined for the previous year).

The manner of calculating the value of the Canadian business that is the subject of the investment is prescribed in section 3.1 of the Investment Canada Regulations and is based on the Canadian business’ asset value as shown on the balance sheet of the Canadian business at the end of the last completed fiscal year before its proposed acquisition.

The purposes of the Investment Canada Act (the Act) are “to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada and to provide for the review of investments in Canada by non-Canadians that could be injurious to national security.” (s. 2).

With respect to all investments except those that fall within a prescribed type of business activity as set out in Schedule IV of the Regulations, the Department responsible for the administration of the Act is Innovation, Science and Economic Development Canada.

 Click on the link above for further information.[/restrict]