Update On Foreign Investment In Canada

Over the past year Canada has witnessed a number of significant developments in its foreign investment review process. In particular:

• the monetary threshold for review of foreign investments under the Investment Canada Act (the "ICA") will be significantly increased;
• the Canadian Government established a regime to screen foreign investments based on national security concerns;
• several acquisitions by foreign state-owned investors were approved pursuant to guidelines applicable to such investors; and
• the Canadian Government filed its first lawsuit against a foreign investor for an alleged failure to comply with undertakings.

NEW THRESHOLD FOR REVIEW

Under the ICA, Canada's federal Industry Minister is required to review and approve acquisitions of control of Canadian businesses that meet certain monetary thresholds if they are of "net benefit to Canada." The new review threshold for direct acquisitions¹ of Canadian businesses not engaged in cultural