Canada Applies The Breaks On Foreign Takeovers

Canada is definitely not fully open for business “until the economy recovers from the effects of the Covid-19 pandemic.” In a terse announcement in the middle of this past weekend, the Investment Review Division of Innovation, Science and Economic Development Canada moved to protect from foreign takeovers, businesses: “related to public health or involved in the supply of critical goods and services to Canadians or to the Government”.

Worried that declining valuations could lead to opportunistic (foreign) investment behaviour, the Government has announced enhanced scrutiny of foreign investments of any value and, as well, of investments by state owned enterprises or private investors assessed as being tied to or subject to direction from foreign governments.

In the weekend Statement, there is no elaboration on “critical goods and services”. However, pre-existing “Guidelines On The National Security Review of Investments” created a regime (separate from the “net benefit” test under the Investment Canada Act) which allowed the Government to review, block or mandate conditions on certain acquisitions including those with a potential impact on the security of Canada’s critical infrastructure: “processes, systems, facilities, technologies, networks, assets and services essential to the health, safety, security or economic well-being of Canadians and the effective functioning of government”.

The weekend Statement makes it clear that all investments no matter what size will be subject to a stricter national security review than was the case previously and encourages any foreign investor to seek regulatory clarity by filing notification under the Investment Canada Act very early.

The new foreign investment review provisions will delay or potentially block transactions of everything from a small technology company to a large manufacturer. While it is likely that it is medical supplies and equipment and pharmaceuticals which the government has in mind, the provisions will catch everything in its net.

For more information, please contact:

Barry Campbell: barry@campbellstrategies.com
T: 416-368-7353 x 101

Related Blog Posts

A New Liberal Leader. A Perilous Time. The Federal Election to Come.

With a new Liberal Leader in place and Parliament on the verge of resuming, a Federal election will soon be upon us. In that contest…

Read More >: A New Liberal Leader. A Perilous Time. The Federal Election to Come.

(US) Buyers Beware: Canada’s New Economic Security Screen Will Keep out Predatory Acquisitions

While the USMCA or CUSMA (as Canadians prefer to call it) remains in force (or for however long it remains in force), acquisitions of Canadian…

Read More >: (US) Buyers Beware: Canada’s New Economic Security Screen Will Keep out Predatory Acquisitions

“Country Risk” For Investors:  It’s Not Canada. It’s the United States.

In this upside down and volatile world investors now inhabit, it is the United States which astonishingly is starting to fail most benchmarks in country…

Read More >: “Country Risk” For Investors:  It’s Not Canada. It’s the United States.

Strategies for Canada in the New World Order

New language for the planet we’re on. The Fertile Crescent, the Ukraine’s wheat fields, the fractious Balkans, the Sudetenland. “Geography is destiny”. But Canada? Yes, for…

Read More >: Strategies for Canada in the New World Order

Reflections on Trudeau’s Departure and a Look Ahead

It is with some sadness that we should watch the end unfold. It is not, as some Opposition leaders have chosen to make it, a…

Read More >: Reflections on Trudeau’s Departure and a Look Ahead

Where Do The Liberals Go From Here?

Political pundits are rarely at a loss for words. Yesterday’s unprecedented events in Ottawa could strike one dumb.  But we will take a stab, political…

Read More >: Where Do The Liberals Go From Here?

Gladiator II:  Canada Confronts a Re-Elected Donald Trump. Let the Games Begin.

When he enters the arena on January 20th, 2025, an emboldened President Trump won’t need a net. The rest of us will.  He is spoiling…

Read More >: Gladiator II:  Canada Confronts a Re-Elected Donald Trump. Let the Games Begin.

Divorce NDP Style

The NDP decision to end their agreement to support the minority Liberal government (the “Supply and Confidence Agreement”) is more about political positioning for the…

Read More >: Divorce NDP Style

Sometimes It’s Not Just a By-election…

We Won, They Lost No one was more surprised by last night’s victory than my fellow Conservatives. When St. Paul’s boundaries were redrawn 1996 the…

Read More >: Sometimes It’s Not Just a By-election…