Indigenous equity participation and major project success in Canada

 
Accelerating the delivery of major projects is a core mission of Canada’s federal government. Budget 2025 detailed the government’s plans to fast-track nation-building projects, all while “upholding Indigenous rights and creating opportunities for Indigenous Peoples to derive economic benefits from major project development”. While further information on the goal of developing major capital projects across the country can be found in our previous article on Budget 2025, there are several initiatives arising from the Budget that may impact the number of major projects which have an Indigenous equity component:

• Canada’s Major Projects Office (MPO), launched in August 2025, includes the creation of the Indigenous Advisory Council (IAC). The members of the IAC are from First Nations, Inuit, Métis, and Modern Treaty and Self-Governing communities. The IAC supports the MPO by ensuring that Indigenous economic participation is embedded in major projects advanced in Canada.
• The federal government has doubled the Indigenous Loan Guarantee Program from $5 billion to $10 billion to enable more Indigenous communities to become equity owners in major projects.

Considerations when structuring Indigenous equity partnerships

Equity partnerships allow Indigenous communities and project proponents alike to benefit by aligning the priorities and incentives in relation to project development and operation. For Indigenous communities, the governance framework implemented through equity ownership can also provide Indigenous partners with influence over business decisions that impact them and community members, and the opportunity to influence and profit from project development.

Below, we look at several of the key considerations that proponents should consider when negotiating equity partnerships with Indigenous communities or entities.

Indigenous protocols

In negotiating equity arrangements, proponents should be mindful of considering culturally respectful ways to engage Indigenous communities, often outlined in community-specific protocols or traditional laws. Adhering to those methods of engagement helps build the trust and respect crucial to a successful partnership.

Financing

Creativity is often required in considering how capital funding will be addressed over the life of the project given that access to capital can be a barrier to Indigenous economic participation. For example, in addition to the initial equity investment, proponents should consider how capital will be funded, as well as appropriate remedies in the event an equity partner, including an Indigenous equity partner, fails to fund the same. Creative solutions may include:

• treating capital calls for maintenance capital differently than capital calls for growth capital, where equity partners (including Indigenous equity partners) may want more flexibility on the ability to opt in to growth projects, depending on the overall capital commitment of the same;
• providing for longer capital call periods to ensure Indigenous equity partners have sufficient time to raise third-party financing if required;
• providing for mechanisms whereby the proponent funds all or a portion of the Indigenous partner’s capital calls on the Indigenous partner’s behalf in the event the Indigenous partner is unable to fund the same by way of a low-interest loan that could be paid back via distribution sweeps, dividends, or similar funding mechanics; and/or
• providing for a reserve fund to provide for a buffer against potential future capital call requirements.

Such solutions will need to be considered in light of the overall economics of the underlying project and whether they adversely impact cash flow expectations for the partners.

Governance

A balance may need to be struck between proponents wanting to retain operational control of the project and the Indigenous groups involved, who, similar to any other investor acquiring an equity interest in a project, may expect voting rights on major decisions depending on the overall equity interest being acquired. Proponents will want to understand the scope of governance rights that will be expected based on the equity being offered. In addition to governance rights, it is important for proponents to consider how they will achieve alignment with their Indigenous equity partners on the project development and operations, whether through offering enhanced information reporting rights over the life of the project to the Indigenous partner, providing for an Indigenous advisory committee on the project, or otherwise.

Looking ahead

We expect the trend of Indigenous equity partnerships to continue to grow as part of major project development and operation in Canada. There is a heightened focus on building infrastructure projects across the country, and new tools and programs are being developed to increase the ability of Indigenous communities to invest. For more information about structuring Indigenous equity partnerships, please contact a member of Torys’ Indigenous practice.