CANADA: Canada Lifts Threshold for Canada Foreign Takeover Reviews

Monday May 28 2012

It has been reported that Canada will boost the threshold at which it will review proposed Canada foreign takeovers of Canadian companies.

It is thought that the government will gradually raise the threshold for mandatory reviews to proposed acquisitions with at least C$1 billion in enterprise value. The current threshold is C$330 million ($320 million) in asset value.

The Conservative government are following recommendations of a policy review panel that concluded in 2008 that the current way of reviewing proposed foreign investments needed to be changed.

The Investment Canada Act requires that all foreign takeovers over a certain size carry ’a net benefit’ to the country, but the law fails to define the concept more specifically, leaving investors uncertain.

Proposed amendments to the Investment Canada Regulations are necessary to bring into force the amendments to the Investment Canada Act (ICA) that were passed through the Budget Implementation Act, 2009. The ICA amendments raised the threshold for investment reviews to $1 billion over a four-year period and changed the basis of the threshold from asset value to enterprise value.

The investment review threshold will initially rise from C$330 million in asset value to C$600 million in enterprise value. After two years, it will go up again to C$800 million, and rise to C$1 billion two years later.