On May 19, 2020, the federal government published draft legislation that, if implemented, would give the Industry Minister (Minister) the authority to extend national security review time periods under the Investment Canada Act by up to six months.
The Minister will have the power to issue those extensions until September 30, 2020, and can also extend periods retroactively from March 13, 2020.
This legislation follows a government policy statement indicating that foreign investments in Canada by state-owned enterprises and investments in businesses related to public health or involved in the supply of critical goods and services to Canadians or to the government will receive enhanced scrutiny.
WHAT THIS MEANS FOR BUSINESSES
Foreign investors and Canadian businesses will need to rethink their strategy for submitting notifications to the Canadian government under the Investment Canada Act in light of these legislative and policy announcements.
Foreign investors that are looking to start new businesses in Canada or acquire control of existing Canadian businesses need to plan for the possibility of a protracted national security review that could extend well beyond the already lengthy timeline for such reviews.
Parties involved in a change of control transaction will also
need to consider whether to allow for flexibility for the outside
date for closing if they anticipate a national security review
occurring between signing and closing.
We will continue to monitor developments and provide updates as we
become aware of them.
Originally published 8 May 2020
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