Amendments To The Investment Canada Act Intended To Increase Transparency

On April 27, 2012, the federal government announced it would amend the Investment Canada Act to allow the minister of industry greater flexibility in explaining why a proposed foreign takeover of a Canadian business raises preliminary concerns. The amendments, contained in the government's annual budget bill, will also empower the minister to accept offers of security as a performance guarantee.

Canada's foreign investment regime requires that any acquisition of control of a Canadian business by a non-Canadian, where the book value of the assets of the Canadian business exceeds a prescribed threshold (currently C$330 million), be reviewed and approved by the minister of industry before closing. The minister must determine the transaction is likely to result in a "net benefit" to Canada, based on a number of factors contained in the Act. In the 26-year history of the Act, governments have used it only twice to block transactions: once in 2008 when Alliant Techsystems