In Depth
The most recent proposed amendments are the most extensive reforms to the ICA in more than ten years. They respond to calls for modernization of the ICA to respond to strategic and geopolitical concerns, and are intended to further support Canada’s ability to screen, review and impose conditions on foreign investments on national security grounds.
The proposed amendments will have a significant impact on how foreign investors discharge their obligations under the ICA and in the national security review process. Key reforms included in the proposed amendments include:
- Mandatory Pre-implementation Filing Requirements. The legislative amendments would require all foreign investors to make pre-closing notifications for investments in prescribed business sectors, and foreign investors would be prohibited from completing their investments until the prescribed national screening periods have expired. The prescribed business sectors, which are expected to build upon existing national security guidance, and the prescribed timelines that will apply, have yet to be announced and will be set out in regulations. This amendment formalizes the practice of filing pre-closing notifications voluntarily (rather than post-closing as is legally permitted today) for any investment that could raise national security concerns to obtain certainty that the investment does not raise national security concerns that an investor will have to deal with post-closing.
- Flexibility and Efficiency in the National Security Review Process. The legislative amendments introduce new powers for the Minister to, among other things, take interim measures to protect Canada’s national security during the course of a national security review, and accept undertakings to mitigate an investment’s potential risk to Canada’s national security. These new powers are intended to introduce flexibility and create efficiencies within the existing national security review framework, particularly where foreign investors are motivated to work with the Canadian government to mitigate any national security concerns.
- Sharing Investor-Specific Information with Allies. The legislative amendments introduce new powers for the Minister to share information with Canada’s allies, on any terms and conditions that the Minister deems appropriate, to support foreign investment reviews and national security assessments. These changes are similar to amendments made to facilitate coordination with allies that were made to the US regime in 2018. Under existing provisions, information about specific investors is generally considered protected and the Canadian government is not officially permitted to disclose such information, including to foreign states. Legislative announcements indicate that information that raises confidentiality or other concerns will not necessarily be shared, and that information will only be shared in the context of a national security review. The proposed information sharing could nevertheless raise concerns as the information foreign investors are required to provide in notifications and other filings often contain highly confidential commercial and personal data.