Foreign Investment in Canada: Time Periods May Be Extended Under New Legislation

On July 27, 2020, the Time Limits and Other Periods Act (COVID-19) came into force. This new law gives the Minister of Industry, Science and Innovation (Minister) the authority to extend national security review time periods under the Investment Canada Act (ICA).

The effect of the new statute is to temporarily authorize the extension of time periods under the national security provisions of the ICA, and other federal laws, including the time it takes the government to screen for national security issues after the filing of a notification. Its purpose is to prevent unfair or undesirable results that may arise from the government’s or private parties’ inability to meet the usual time limits due to the exceptional circumstances surrounding the COVID-19 pandemic.

The law passed by the House of Commons and Senate includes a minor amendment to the draft legislation originally proposed in May 2020; for more information on the draft legislation, see our May 2020 Blakes Bulletin: Federal Government Proposes New Law to Extend National Security Review Timelines. Now, the Minister has the power—but not the obligation—to extend the national security time periods by up to six months or until December 31, 2020, whichever comes first. These extensions may also be applied retroactively until March 13, 2020.

This new statute is the latest in a series of developments focusing on foreign investment in Canada during COVID-19, with a view to enhance the government’s authority to scrutinize foreign investments under the ICA:

• In April 2020, the Canadian government issued a policy statement announcing enhanced scrutiny of foreign investments by state-owned enterprises and investments in businesses related to public health, or involving the supply of critical goods and services to Canadians or the government. The government also encouraged the early filing of the ICA notification to allow for consideration of national security issues prior to closing.
• In June 2020, the Standing Committee on Industry, Science and Technology of the House of Commons undertook a review of the ICA. The committee invited officials from the Investment Review Branch, the Canadian Security Intelligence Service, the Department of Public Safety and Emergency Preparedness, academics, policy experts and legal practitioners (including Blakes Partners Brian Facey and Joshua Krane) to testify on the effectiveness of Canada’s existing foreign investment regime.

IMPLICATIONS FOR BUSINESS

In light of these developments, foreign investors and Canadian businesses should plan ahead and discuss their strategy early on for having the government review a transaction for potential national security concerns. In this regard, parties may want to plan for the possibility of a prolonged screening process and/or full-scale national security review that could extend beyond the already lengthy timeline for such reviews. This may include providing flexibility in the outside date for closing in the event a national security review is commenced between signing and closing.

If you have any questions on Canada’s foreign investment regime, please do not hesitate to contact any member of the Blakes Competition, Antitrust & Foreign Investment group or your usual Blakes contact.

Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.