Proposed Amendments to Enhance Investment Canada Act’s Enforcement and Transparency

The Minister of Industry has proposed amendments to the Investment Canada Act to bolster enforcement and increase the transparency of aspects of the review process.

The amendments would authorize the Minister to accept a security bond in connection with undertakings provided by foreign investors. The security would be provided as a surety against penalties that could be ordered by a court for any future non-compliance with any undertakings. This change provides incentive to investors to negotiate even more precise undertaking commitments to increase compliance certainty and minimize the likelihood of penalties being ordered and the security being realized.

The Minister would also be permitted to publicly disclose an interim decision that he is not satisfied that an investment is likely to be of net benefit to Canada, and the reasons for that decision. In such circumstances, the proposed investor would have the opportunity to make representations and submit undertakings within 30 days to convince the Minister otherwise. The Minister’s disclosure would be made in a way that is not intended to prejudice the potential investor or the target Canadian business. Although this disclosure will lead to increased publicity for negative interim decisions, it is hoped the exercise will also increasingly specify the approval issues facing the investor by providing a transparent and more certain outline of matters that need to addressed for approval.

These changes reflect the government’s recent experiences in the US Steel and BHP/Potash cases and signal the government’s clear intention to ensure that it has the tools to effectively enforce the Act.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

© 2021 by Torys LLP.
All rights reserved.