The text of the Trans-Pacific Partnership (TPP), released
publicly on November 5, 2015, includes commitments by the
Government of Canada to increase monetary thresholds (the
"Review Threshold") to C$1.5 billion in
enterprise value for the review of investments from TPP countries
under the Investment Canada Act (ICA). The increase in the
Review Threshold is expected to come into force in 2017.
Under the ICA, the Minister of Innovation, Science and Economic
Development (formerly the Minister of Industry) will determine
whether an investment that is subject to review is likely to be of
"net benefit" to Canada. That determination will not be
subject to the dispute settlement provisions under the TPP.
Canada's commitment to increase the Review Threshold for
investors from TPP countries is similar to its commitment made in
September 2014 under the Canada-European Union Comprehensive
Economic and Trade Agreement.
On April 24, 2015, new regulations came into force to increase
the Review Threshold for "net benefit" reviews of
acquisitions of control by non-Canadians from WTO countries from
$369 million, based on the book value of the assets of the Canadian
business being acquired, to $600 million, based on the enterprise
value of the Canadian business being acquired. This Review
Threshold for WTO investors will increase to $800 million in two
years' time and to $1 billion two years later.
As with the new threshold introduced for WTO investors, the
increased Review Threshold for TPP and European Union (EU)
investors will be subject to specific exceptions in the case of
acquisitions by state-owned enterprises (SOE) and acquisitions of
cultural businesses. SOEs from WTO, TPP and EU countries will
remain subject to the current, lower Review Threshold, based on
book value. Cultural businesses will continue to be subject to an
even lower, and fixed, $5 million book value Review Threshold, as
will all acquisitions of control (of any Canadian business) by
non-WTO, non-TPP and non-EU investors. In addition, the Government
of Canada will preserve its ability to review investments of any
size that could pose threats to Canada's national security.
For the TPP provisions to come into force in Canada, Canada and
a sufficient number of other signatories must ratify the treaty. If
implemented, the change to the Review Threshold for TPP and EU
investors will reserve foreign investment reviews for only the
largest investments emanating from a growing list of Canada's
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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