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Mergers and Acquisitions in Canada

The Investment Canada Act[[(R.S., 1985, c. 28 (1st Supp.))]] (the “Act”) regulates certain investments in Canadian businesses by non-Canadians.[[For the purposes of the Act, a non-Canadian includes any entity that is not controlled or beneficially owned by Canadians.]] The purpose of the Act is “to provide for the review of significant investments in Canada by non-Canadians in order to ensure net benefit to Canada and to provide a mechanism for reviewing and blocking investments that may be injurious to national security.”

The Act is administered and enforced by Industry Canada and, in particular, the Director of Investments (the “Director”) at the Investment Canada Review Division, with ultimate approval for reviewable transactions granted by the Minister of Industry (the “Minister”). For certain investments that relate to Canadian cultural businesses, the Department of Canadian Heritage (“Heritage Canada”) is responsible for administering the Act.

Although first enacted in 1985, and despite a large number of reviews of foreign investments to date, only two foreign investments outside of the cultural sector have been refused.

While compliance with the legislation can range from a minor inconvenience to the more involved negotiation of specific undertakings relating to future employment, capital expenditures or other commitments, it has not proved to be a significant impediment to foreign investors wishing to invest in Canada.

Additional posts from the blog



New Bill Heightens Potential for More Investment Canada Reviews of SOE Acquisitions

by Sandra Walker

Last week the Canadian Government introduced amendments to the Investment Canada Act (ICA) to implement its revised policy towards state-owned enterprises (SOEs) which it announced in December last year. At that time, while it approved the acquisition by Chinese SOE, CNOOC, of Canadian oil and gas company, Nexen, the Government announced its intention to prohibit acquisitions of control of Canadian oil sands businesses by SOEs except on an exceptional basis. It also stated that joint ventures and minority investments were welcome. In addition, the government indicated it would closely monitor SOE acquisitions in other sectors of the economy and would distinguish between SOE and non-SOE investments when setting the ICA review threshold. (See Focus on Foreign Investment Review, December 2012)



The Autorité des marchés financiers Proposes An Alternative Approach to Securities Regulators Intervention in Defensive Tactics

by Guy Paul Allard

On March 14, 2013, the Autorité des marchés financiers (“AMF”) published for comments a consultation paper (the “AMF Proposal”) pertaining to defensive tactics in response to take-over bids. This consultation is taking place concurrently with the one launched the same day by the Canadian Securities Administrator (“CSA”) with the release of proposed National Instrument 62-105 Security Holder Rights Plans and proposed Companion Policy 62-105CP Security Holder Rights Plans (collectively, “62-105”). Unlike the CSA’s 62-105, the AMF Proposal addresses all defensive tacticsii, not only security holders rights plans.



Proposed New Framework for Rights Plans a Potential Game Changer for Hostile Bids

by Daniel Katzin

The Canadian Securities Administrators published for comment a proposed new regulatory framework for rights plans under proposed National Instrument 62-105 Security Holder Rights Plans and proposed Companion Policy 62-105CP Security Holder Rights Plans (collectively, “62-105”). If adopted, 62-105 would provide issuers with a game changing tool to respond to hostile take-over bids, where a target board will be able to use a rights plan as leverage to negotiate with a potential bidder.

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