CANADA: Canadian government eases foreign takeover rules

Monday November 7 2016

On November 1, 2016, the Canadian government announced two important developments related to the Investment Canada Act in its Fall Economic Statement, 2016, to facilitate foreign investment in Canada.

In the Statement the Government has indicated that the threshold for automatic Government review of acquisitions will be raised to C$1-billion (US$747-million) in enterprise value in 2017, rather than 2019 as previously scheduled. This threshold applies to the direct acquisition of control of a non-cultural Canadian business by a foreign investor that is ultimately controlled by residents of a World Trade Organization member and is not a state-owned enterprise.

Although not part of the government’s November 1, 2016 announcement, if The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada comes into force the threshold will increase to C$1.5 billion for investors that are ultimately controlled by residents of EU members

The threshold is currently set at C$600-million. Before the end of 2016, the government will publish guidelines under which investments will be examined under the national security provisions.

The new threshold would apply in most cases, as long as they don’t raise national security concerns, the buyer is not a state-owned enterprise or if there are other sector-specific restrictions, such as for airlines.

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