As indicated in our March 2017
bulletin, the Government of Canada previously announced its
intention to accelerate by two years the previously scheduled
increase to the "enterprise value" threshold under the
Investment Canada Act. The Government confirmed that
intention in the 2017 federal Budget. The test was scheduled to remain at
C$600 million until April 24, 2017, when it would increase to C$800
million for a further two-year period (until April 2019), and then
C$1 billion until December 2020. The announcement suggested that
the threshold would increase to C$1 billion on April 24, 2017
instead of the previously scheduled C$800 million, but the
Government had not introduced legislation to that effect.
The Government has now introduced into the House of Commons Bill C-44, which would raise the enterprise
value threshold to C$1 billion for investments implemented after
the day on which the relevant provisions of Bill C-44 come into
force. In effect, Bill C-44 applies retroactively in that any
application for review that is before the Minister at the time that
the relevant provisions of Bill C-44 come into force, but that
would not have been caught by the new C$1 billion threshold, is
deemed never to have been filed. Until Bill C-44 comes into force,
the threshold will increase from C$600 million to C$800 million on
April 24, 2017. It will increase to C$1 billion, as noted, upon
Bill C-44 coming into force. Beginning January 1, 2019, the C$1
billion threshold will be adjusted annually by a GDP-based index.
The table below summarizes the applicable thresholds and the time
periods for which they apply:
Present – April
April 24, 2017 –
date Bill C-44 comes into force
Date Bill C-44 comes
into force – December 31, 2018
January 1, 2019
$1 billion + GDP-based
The threshold generally applies to direct acquisitions by WTO
Investors (firms controlled in WTO countries) that are not
State-Owned Enterprises, and requires filing of an application for
review, to determine whether the investment is "likely to be
of net benefit to Canada". The enterprise value threshold also
applies for non-WTO Investors that directly acquire control of a
Canadian business that was immediately prior to the investment
controlled by a WTO Investor.
1. This assumes that Bill C-44 becomes law sometime after
April 24, 2017, and before the end of 2017.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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