
INVESTMENTS BY NON-CANADIAN RESIDENTS
Supporting non-Canadian companies to contribute to Canadian companies.
The Investment Canada Act (ICA) governs the acquisition of Canadian businesses by foreign investors. Any takeover by a foreign entity may be subject to review if it exceeds certain financial thresholds. For example:
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Direct investments: $5 million in assets for non-WTO members.
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Indirect transactions: $50 million, including cultural businesses (section 14.1(6) LIC).
“Net profit”: a central criterion
A foreign investment must demonstrate significant benefits to Canada. The main criteria (section 20 ICA) include:
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Economic impact: Job creation, use of local resources.
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Canadian Participation: Involvement of Canadians in management and operations.
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Innovation and productivity: Technological improvement and industrial efficiency.
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Competition: Effects on the Canadian market.
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Cultural and industrial policies: Compatibility with national priorities.
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Global competitiveness: Contribution to Canada's international presence.
National Security Review
Any investment that could threaten national security is scrutinized, regardless of its value. The authorities examine in particular:
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Risks to defense and critical infrastructure.
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Transfer of sensitive technologies.
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Threats related to espionage or foreign interference (article 25.3 LIC).
Recent changes: Strengthened controls
The Foreign Investment Review Modernization Act (Bill C-34) introduces:
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Increased financial penalties for non-compliance.
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New protections for sensitive data.
These adjustments aim to increase transparency and better respond to evolving threats.
Approval process
Foreign entities must submit their application to the Investment Review Division of Innovation, Science and Economic Development Canada. The documentation includes a net benefit assessment and a national security analysis. Final approval is issued by the competent minister.
The Canadian government has discretion to approve or reject an acquisition. Working with legal and financial experts is crucial to ensure compliance and maximize the chances of approval. By demonstrating their commitment to Canada’s economic and security interests, foreign investors can strengthen their credibility and success under the ICA.
