M&A: Federal Government Announces Investment Canada Act Changes to Add Transparency to Canadian Foreign Investment Review Process
On April 27, 2012, the Federal Government announced that it plans to amend to Investment Canada Act (ICA) to give the Minister of Industry more freedom to disclose whether an investment is likely to be found to be of net benefit to Canada (through Bill C-38, the Jobs, Growth and Long-term Prosperity Act, introduced on April 26th). In its news release, the Government said:
“Through the Jobs, Growth and Long-term Prosperity Act, the Harper Government has introduced amendments to the Investment Canada Act to provide the Minister of Industry with a greater ability to publicly communicate information on the review process, while preserving commercial confidences. The amendments would also promote investor compliance with undertakings by authorizing the Minister to accept security, when offered by an investor, for payment of any penalties ordered by a court for a contravention of the Investment Canada Act.
The amendments would allow the Minister to disclose publicly the fact that he has sent a preliminary notice to an investor that he is not satisfied that the investment is likely to be of net benefit to Canada. They would also allow the Minister to publicly explain his reasons for sending the notice as long as it would not cause harm to the Canadian business or the investor.
The Harper Government recognizes that strong confidentiality protection is critical to ensure that investors provide the information necessary to conduct reviews as well as to prevent the harm that could come from disclosure.”
The announcement is consistent with recent statements in the Federal Budget, tabled on March 29, 2102 (see: 2012 Budget Includes Changes to Canada’s Foreign Investment Regime), in which the Government said that it would be introducing “targeted improvements” to the administration of the Investment Canada Act “in the interests of greater transparency while preserving investor confidentiality.”
Bill C-38 would, if passed, broaden the exceptions to the existing privilege protections under the ICA to allow the Minister to publicly explain why an investor has been sent a notice under subsection 23(1) of the ICA (a preliminary notice that the Minister is not satisfied that an investment is likely to be of net benefit to Canada, the relevant substantive test for approving reviewable investments under the ICA).
The ICA contains a broad privilege provision, which provides, subject to a number of exceptions, that information received in relation to the enforcement and administration of the ICA is privileged. The ICA also allows investors to make representations and submit undertakings within 30 days of receipt of an interim notice from the Minister (or as agreed between the investor and the Minister).
For the Government’s news release see:
For a copy of the draft Bill (Bill C-38), see:
For more about Canada’s foreign investment review rules see:
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