On March 8, 2022, the Minister of Industry, Science and Technology released a new policy statement related to the Russian invasion of Ukraine. The war has created an environment of elevated Canadian national security and economic risk. As a result, the new policy statement directly affects both net benefit reviews and national security reviews under the Investment Canada Act:
Net benefit reviews: The Act places the burden of proof on foreign investors to satisfy the Minister that a proposed acquisition of the control of a Canadian business above the relevant value threshold is likely to be of net benefit to Canada. Under this policy, investments for the acquisition or control of a Canadian business made, directly or indirectly, by Russian investors will be considered to be a net benefit to Canada only on an exceptional basis.
National security reviews: Regardless of value, investments, loans and other arrangements made by individuals or entities, directly or indirectly associated with, controlled by, or subject to influence by the Russian state will support a determination by the Minister that such investment could be injurious to Canada's national security.
The Canadian government is cautioning all non-Canadian investors and Canadian businesses to carefully review their investment plans to identify any potential connections to Russian investors or entities. In particular, non-Canadian investors should pro-actively identify components of proposed transactions with ties to Russia. This cautionary statement is followed by a warning that Russian-related transactions will require additional due diligence, which may lead to lengthy review periods and requirements to submit detailed information explaining corporate data, structures, and financing relationships.
While officially in place until rescinded, the tenor of this policy statement implies that it will apply at least as long as "Russia's unprovoked attacks on Ukraine" continue.
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