Reviews under the Investment Canada Act

The opportunity

The Investment Canada Act (ICA) regulates foreign investment into Canada. In most cases, a foreign investor acquiring control of a Canadian business must either file an Application for Review or a Notification.

The regime is not designed to discourage ordinary commercial investment. Rather, it gives the federal government a framework to assess larger acquisitions and investments that may raise economic, strategic, or national security considerations.

For investors, the key point is that Canada remains highly open to foreign capital, including in strategically important sectors. However, the government increasingly expects significant investments to support Canadian employment, operations, research and development, supply chains, and broader economic security objectives.

Market entry and investment strategies

Application for Review. An Application for Review is generally required only where a non-Canadian investor proposes to directly acquire control of a Canadian business that exceeds prescribed financial thresholds. For 2026, the threshold is approximately

• $2.2 billion in enterprise value for investors from the United States, the United Kingdom, the European Union, and certain other trade agreement countries; and
• $1.45 billion in enterprise value for most other private-sector investors.

Lower thresholds apply to state-owned enterprises and cultural businesses.

Net benefit to Canada. Where review is required, the investor must demonstrate that the transaction is likely to be of “net benefit” to Canada. In practice, this process is usually less focused on whether a transaction should be allowed to proceed, and more focused on the commitments that the investor is prepared to make regarding the future operation of the Canadian business. Transactions subject to review cannot close until approval is obtained, which generally takes approximately 75 to 90 days.

Commitments. Common undertakings include commitments to do the following:

• Maintain Canadian employment levels.
• Retain senior management and decision-making functions in Canada.
• Preserve or increase capital expenditures.
• Support Canadian research and development activities.
• Maintain production, processing, or refining activities in Canada.
• Continue investment in strategically important Canadian assets.

Most commitments are time-limited to three to five years.

Notifications. Notifications are required in most other cases. A Notification may generally be filed before closing, or within 30 days after closing, and does not usually result in a substantive economic review.

Financing and investor support

The Canadian government’s current approach is increasingly outcome-oriented. In major transactions, especially in strategic sectors, the government often seeks practical commitments that align the investment with Canadian policy priorities.

Recent transactions illustrate this approach. For example, in connection with the proposed combination of Anglo American and Teck Resources, the government secured commitments relating to

• maintenance of Canadian headquarter functions;
• billions of dollars of Canadian capital investment and critical minerals development;
• workforce training; and
• long-term support for Canada's mining sector.

Similarly, approval of Glencore's acquisition of Teck’s steelmaking coal business was accompanied by a significant package of commitments relating to Canadian employment, operations, and investment.

These transactions demonstrate that the government's focus is often not on preventing foreign ownership, but rather on ensuring that significant investments generate long-term benefits for Canada, and support broader economic and industrial policy objectives.

Key risks and how to manage them

National security review

For many transactions today, the more significant issue is national security review.

Regardless of transaction size, the government may review virtually any foreign investment if it believes the investment could be injurious to Canada's national security. This includes acquisition-of-control transactions and minority investments.

Following receipt of a Notification, the government generally has an initial 45-day period to determine whether it wishes to commence a more detailed national security review. The likelihood of review depends heavily on both the identity of the investor and the nature of the business. Higher-risk categories typically include the following:

• investors connected to foreign governments, particularly state-owned enterprises
• investors from countries with geopolitical tensions involving Canada and its allies
• businesses involving sensitive technologies, artificial intelligence, cybersecurity, or telecommunications
• businesses possessing large amounts of sensitive personal data
• critical infrastructure assets
• critical minerals projects and critical minerals supply chains

Economic considerations

Economic security considerations have also become increasingly important. The government has shown a growing willingness to assess whether a transaction could affect Canada's ability to maintain strategic capabilities, processing capacity, technological leadership, intellectual property, or access to critical resources.

A recent important development was the enactment of Bill C-34 in 2024, which represents the most significant modernization of the ICA in more than a decade. Among other things, the legislation allows the government to resolve national security concerns more easily through negotiated conditions and undertakings.

Overall approach

As a result, Canada's approach is increasingly surgical rather than prohibitive. While the government remains willing to block transactions in exceptional circumstances, it is increasingly prepared to approve investments subject to conditions that address specific concerns. The review of Paladin Energy’s acquisition of Fission Uranium is an example of this approach. The transaction underwent a full national security review due to concerns relating to Canada's uranium sector and Chinese state–linked interests associated with the transaction. Rather than prohibiting the transaction, however, the government ultimately approved it subject to undertakings and mitigation measures.

The following are examples of national security–related conditions that may be required:

• restrictions on access to sensitive information, data, technology, or intellectual property
• cybersecurity and information security requirements
• Canadian-resident director, officer or management requirements
• governance protocols and security committees
• requirements to maintain key facilities, operations, or decision-making functions in Canada
• domestic processing, refining, or value-added production commitments
• restrictions on transferring sensitive technology or know-how outside Canada
• reporting, audit and compliance obligations

Full national security reviews currently average approximately 160 days, and should be incorporated into transaction planning where potential concerns exist.

Indigenous partnerships

Although the ICA itself does not specifically regulate Indigenous participation, Indigenous considerations are increasingly relevant in large Canadian investments, particularly in the natural resources, infrastructure, energy, and critical minerals sectors.

Investors should consider incorporating services and procurement agreements, and supporting long-term community engagement and project development, in their undertakings. As well, offering equity ownership in projects to Indigenous communities is increasingly being utilized by proponents in the development and operation of major projects. Strong Indigenous partnerships can materially improve project execution, and align investments with broader Canadian economic and public policy objectives.

Practical takeaways

• Determine early whether the transaction requires an Application for Review or merely a Notification.
• Build potential 75-day to 90-day net benefit review periods into transaction timelines where approval is required.
• Assess national security risk independently of financial thresholds.
• Pay particular attention to critical minerals, advanced technology, critical infrastructure, and sensitive data assets.
• Expect increasing focus on commitments relating to employment, Canadian decision-making, investment, processing capacity, and economic security.
• Consider whether voluntary filings or review-related closing conditions are appropriate where national security issues may arise.
• Allow sufficient time for potential national security reviews, which currently average approximately 160 days.

Bottom line

Canada remains one of the world’s most open destinations for foreign investment, but transactions involving strategically important assets now receive significantly greater scrutiny than in the past.

The government's focus is increasingly on securing commitments and safeguards that advance Canadian economic and national security objectives, rather than simply deciding whether a transaction should proceed.

All dollar amounts in this primer are C$ unless indicated otherwise.