Monday, 14 May 2012

A Slightly Less Cold House for Foreign Investors

One of the components of the Federal Government's omnibus budget bill, the Jobs, Growth and Long-term Prosperity Act, involves amendments to the Investment Canada Act. In certain circumstances, take-overs by foreign persons of Canadian corporations must be reviewed by the Minister for Industry and, if the Minister concludes that the proposed investment is not of "net benefit" to Canada, the foreigners have to remain on the outside looking in. Aliant Techsystems and BHP Billiton saw their take-over efforts run aground on the net benefit rock, as Kevin Ackhurst reminds us.

Decisions by the Minister are to be taken within 45 days, although there is a power to extend the time for decision. If the decision is negative, further submissions can be made, but the reasons for the decision need not be disclosed until a final decision is reached. Not an ideal situation for a multi-national corporation with potentially billions of dollars on the table, and not hard to perceive how this might chill the enthusiasm of foreign investors (as if it were not cold enough here already...).

Amendments to the decision-making process are now proposed, along with the introduction of a ministerial power to accept offers of security. The amendments to the decision-making process do not change the basic infrastructure of the Act, but the Minister will have a little bit more elbow room to disclose concerns about proposed investments early in the decision-making process. Strangely, this does not seem to be accompanied by a provision allowing proponents to amend their applications, but presumably a 'right to respond' to concerns raised by the Minister will be read in to the statutory scheme, on the basis that procedural fairness requires it (see, e.g., para. 17 here).


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