Investment Canada Act Compliance Requirements May Be A Rude Surprise

Most non-Canadian companies thinking about acquisitions in Canada are aware that their transactions may be subject to the notification and substantive review provisions of the Competition Act. However, it often comes as a rude surprise to foreign acquirors that they also must contend with the Investment Canada Act ("ICA"), Canada's foreign investment review legislation. Indeed, some foreign acquirors learn to their dismay that it is ICA approval, rather than clearance under the Competition Act, which can prove to be more time-consuming to obtain.

The costs of ICA approval can be significant as well. In a recent acquisition, for example, the foreign investor was obliged to provide an extensive series of undertakings in order to secure ICA approval, including: agreeing to pursue over $1.4 billion in major infrastructure projects; committing to various additional capital expenditures; maintaining the Canadian business's corporate offices in Canada along with significant resident