Foreign Direct Investments in Canada

FDI in Canada is absolutely vital for the country’s prosperity; however complying with FDI regulation in Canada is not without its pitfalls & can, therefore, be quite a challenge. So, let’s take a closer look at how verification of non-resident investors in Canada is done.

Jurisdictional Thresholds

Whenever a new company is created in a given jurisdiction or investment is made in a specific industry, a special notification form should be filled out & submitted to the relevant regulators. Determining whether verification is required requires examining the volume of an investment, whether an investor’s an SOE, whether an acquisition’s indirect or direct & whether the country’s security is jeopardized.

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Operations Capable of Jeopardizing Canada’s Security

When evaluating potential risks an investment is capable of posing to Canada’s security, Canada’s government need to make sure that:

• an investment won’t impact negatively Canada's defense sector;
• the purchased company isn’t involved in manufacture of any military products/technologies;
• an investment won’t interfere with any ongoing or upcoming intelligence activities;
• an investment won’t entail any espionage activities;
• an investment won’t damage Canada’s interests, both domestically & internationally;
• an investment won’t impact the transferring of any cutting-edge technologies outside Canada;
• an investment won’t damage any critically important infrastructure;
• an investment won’t impede the delivery of vital products/services to the local population;
• an investment won’t impede the delivery of services/products to the local government.

Investors’ Plans 

In their application, an investor needs to state their plans regarding a business after its purchase. This information will help the respective authorities determine if an FDI is capable of qualifying for a “net gain” status for Canada.

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Deadlines

Once an application is submitted, the corresponding regulator has forty five days to reject or satisfy it. If the regulator is unable to come up with a decision by the specified deadline, the deadline may be extended by another thirty days. After the specified deadline expires, the regulator must make up their mind or permission will be granted automatically.

If their application gets rejected, investors are entitled to submit another application within thirty days. Therefore, non-domestic residents planning to start an investment company in Canada should make sure that they satisfy all requirements before submitting their application.

Looking for legal advice on corporate permits for FDI in Canada? Our legal advisors are always on standby to give you all the legal assistance you need.

Investing in Cultural Companies

Investing in cultural companies in Canada means putting money in entities involved in newspaper, book publishing or movie business. From a purely practical point of view, foreign investors looking to get permission to start a company or conclude an M&A deal in this sector will face numerous challenges. 

Confidential Information

Under Canadian legislation, any information received by the relevant minister is considered privileged. No one should knowingly transmit any such information. Anyone (including government officials) who violates the law faces criminal punishment.

Despite being allowed to disclose certain information, the government prefers not to disclosure it without investors’ consent. Therefore, it is a common practice for it to reach a deal with investors on what information can be made publicly available. Usually, the government prefers to seek a compromise with investors which takes into consideration both parties’ interests.

Looking for legal advice on matters pertaining breach of confidentiality in Canada? We will be happy to oblige. 

Conclusion

International companies considering investing in Canadian economy need qualified legal advice. Our legal experts can provide their customers with:

• Legal advice on the application of ICA in relation to proposed business operations;
• Legal assistance with obtaining permits;