In our October 2007 Bulletin, we reported that the
Honourable Jim Prentice, Minister of Industry, had announced in
a speech to the Vancouver Board of Trade that he intended to
deal with the issue of national security in the context of
foreign investment in Canada and that he would also be
addressing specifically the issue of investment in Canada by
state-owned enterprises ("SOEs").
On December 7, 2007, the Industry Minister announced the
issuance of new Guidelines under the Investment Canada
Act directed at clarifying how the Act will be applied to
SOEs' future investments in Canada. In that connection,
while acknowledging that Canada continues to welcome foreign
investment and the benefits that it provides, Mr. Prentice
stated that he wanted to ensure that potential SOE investors
were aware how the Act would be applied to their investment
proposals. In our view, any efforts to improve transparency as
to the manner of the Act's administration will be welcomed
by the business community.
Under the Investment Canada Act, foreign
investments that meet the monetary threshold for review must be
approved by the Minister of Industry, or in the case of
investments in the cultural industries, by the Minister of
Canadian Heritage, to ensure such investments provide net
benefit to Canada.
Under the new Guidelines, the review of an investment by an
SOE, which is defined as an enterprise that is owned or
controlled directly or indirectly by a foreign government, will
focus on ensuring that the "governance and commercial
orientation" of the SOE will result in net benefit to
In reviewing an SOE investment, the Minister will continue
to use the traditional benefit factors enumerated in section 20
of the Act but will, in undertaking that review, have
particular regard to the corporate governance and reporting
structure of the non-Canadian SOE investor. In this regard the
Minister will, among other things, examine: (i) whether the SOE
adheres to Canadian standards of "corporate governance
(including, for example, commitments to transparency and
disclosure, independent members of the board of directors,
independent audit committees and equitable treatment of
shareholders), and to Canadian laws and practices"; and
(ii) how, and the extent to which, the non-Canadian is owned or
controlled by the foreign state.
The Minister will also assess: (a) the ongoing ability of
the Canadian business post-acquisition to operate on a
commercial basis regarding export and processing location
decisions; (b) the participation of Canadians in its operations
in Canada and abroad; (c) the support of on-going innovation,
research and development in Canada; and (d) the appropriate
level of capital expenditures to maintain the Canadian business
in a globally competitive position.
Before approving the investment, the Minister may require
specific formal undertakings to Canada that address some or all
of the foregoing factors. Compliance with any such undertakings
will be monitored in accordance with usual practices under the
The next shoe expected to drop will be the introduction of
legislation aimed at protecting Canada's national security
in the context of foreign investment. However, this new
legislation will not be introduced until the new year based on
comments made by the Minister.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).