Tightens the FDI screening regime

On 22 March 2024, the Investment Canada Act was amended, following royal assent, through Bill C-34: "An Act to amend the Investment Canada Act". This amendment ushers in a modernization package aimed at enhancing the Foreign Direct Investment (FDI) screening mechanism, scheduled to enter into force progressively through the adoption of secondary legislation. Key modifications introduced by the Bill include:

• The implementation of a pre-closing filing requirement in specific sectors deemed sensitive to national security or economic stability.
• An increase in penalties for non-compliance with the Act's provisions.
• The Minister of Innovation, Science, and Industry is now vested with expanded powers concerning foreign investments. These powers include the authority to: a) Impose interim conditions on an investment during the national security review process. b) Accept binding commitments from investors aimed at mitigating potential national security risks associated with the investment.
• The new legislation facilitates greater international cooperation and information exchange related to foreign investment reviews and national security assessments.
• FDI screening now encompasses investments made by State-owned enterprises, irrespective of the investment's value.
• The criteria for FDI review have been updated to consider intellectual property rights developed with Governmental support and the use and protection of personal information of Canadians.
• An investor's history of corruption is now considered a valid factor in determining potential threats to national security.
• The amendment clarifies that the scope of FDI screening also covers asset sales.

On 03 September 2024 several provisions of Bill C-34 entered in to force through the "Order Fixing September 3, 2024 as the Day on which Certain Provisions of AnAct to amend the Investment CanadaAct Come into Force: SI/2024-32". These include:

• Granting the Minister the authority to impose interim conditions during a national security review.
• Allowing the Minister to accept commitments aimed at mitigating national security risks.
• Enhancing information sharing with international partners.
• Establishing new guidelines for safeguarding information during judicial reviews.
• Providing clarification on net benefit review factors to better protect intellectual property funded by the Government of Canada and the personal information security of Canadians.
• Increasing transparency and accountability by clarifying disclosure requirements and reporting on the Minister's use of authority.

• Type:

  • Entry and establishment (Approval and admission)

• Industry:

  • Not industry specific

• Sources:

  • Canada Gazette , Order Fixing September 3, 2024 as the Day on which Certain Provisions of An Act to amend the Investment Canada Act Come into Force, https://canadagazette.gc.ca/rp-pr/p2/2024/2024-07-03/html/si-tr32-eng.html, 03 Jul 2024
  • Government of Canada, Updated Backgrounder: An Act to amend the Investment Canada Act, https://www.canada.ca/en/innovation-science-economic-development/news/2022/12/an-act-to-amend-the-investment-canada-act.html, 27 Mar 2024
  • Parliament of Canada, Act to amend the Investment Canada Act, https://www.parl.ca/DocumentViewer/en/44-1/bill/C-34/royal-assent, 22 Mar 2024