Canada Revises its National Security Review Guidelines for Investments

Amidst unprecedented trade tensions with the United States, on March 5, 2025, the Government of Canada (Government) released updated Guidelines on the National Security Review of Investments (Guidelines) under the Investment Canada Act (ICA). The Guidelines are intended to inform investors of the policies and criteria followed by the Government in administering the national security review process under the ICA and have been updated to:

1. Introduce a new “economic security” factor that the Minister of Innovation, Science and Industry (Minister) can use in assessing whether a proposed investment is injurious to Canada’s national security
2. Incorporate the Government’s Sensitive Technology List into the definition of “sensitive technology”
3. Revise the description of the national security review process to reflect recent amendments to the ICA

The updated Guidelines, along with amendments to the ICA enacted in 2024, signify a continued prioritization of national security concerns in the Government’s screening of foreign investments.

New National Security Review Factor

The Minister will now consider whether an investment has the potential to undermine Canada’s economic security through the enhanced integration of the Canadian business with the economy, or any sector of it, of a foreign state. In announcing the updated Guidelines, the Government stated that “the size of the Canadian business, its place in the innovation ecosystem, and the impact on Canadian supply chains” will be considered in assessing this factor.

This new “economic security” factor expands the scope of national security reviews to capture economic factors that have more typically been considered under the ICA’s “net benefit” review process for larger transactions exceeding certain monetary thresholds and, according to a statement by the Minister, was introduced because “[a]s a result of a rapidly shifting trade environment, some Canadian businesses could see their valuations decline, making them susceptible to opportunistic or predatory investment behaviour by non-Canadians.”

Sensitive Technology List

The Government’s new Sensitive Technology List, which was published on February 6, 2025, has been incorporated into the Guidelines, replacing Annex A, which had set forth a non-exhaustive list of technology areas that may be considered sensitive for the purposes of a national security review. The Sensitive Technology List, which “does not preclude the consideration of legacy technology that is still in use when the Government is considering national security risks,” identifies 11 technology areas that are considered to be sensitive, capturing key areas with national security implications:

• Advanced Digital Infrastructure Technology
• Advanced Energy Technology
• Advanced Materials and Manufacturing
• Advanced Sensing and Surveillance
• Advanced Weapons
• Aerospace, Space and Satellite Technology
• Artificial Intelligence and Big Data Technology
• Human-Machine Integration
• Life Science Technology
• Quantum Science and Technology
• Robotics and Autonomous Systems

Revised National Security Review Process Description

The Guidelines have been updated to incorporate procedural changes introduced by recent amendments to the ICA. Notably, the Guidelines now refer to the Minister’s ability to accept undertakings proposed by transacting parties to mitigate national security risk. For more information on the amendments introduced by Bill C-34, please see our September 5, 2024 bulletin: Next Steps in the Overhaul of the Investment Canada Act Come into Force.

Key Takeaways for Businesses 

• The updated Guidelines, in particular the new “economic security” factor, are likely to expand the national security net to capture a broader range of investments in sectors and of foreign investors investing in Canada that previously may not have been a national security focus.
• Investors looking to acquire or establish a business in Canada must be mindful of the new Guidelines and the possibility that their investment may be subject to an ICA national security review. In particular, investors should be aware of the Guidelines when considering investments in sensitive technologies or other areas specifically mentioned in the Guidelines, including the supply of critical goods and services to Canadians, critical minerals or critical mineral supply chains, or access to sensitive personal data.

For more information on these developments, please contact any member of our Competition & Antitrust and Foreign Investment groups.