Thresholds

Thresholds for Review

Private sector WTO investments

Pursuant to subsections 14.1(1) and (2) of the Investment Canada Act ("the Act"), starting June 22, 2017, the review threshold is $1 billion in enterprise value for investments to directlyFootnote * acquire control of a Canadian business by:

  1. WTO investors that are not state-owned enterprises; and
  2. by non-WTO investors that are not state-owned enterprises where the Canadian business that is the subject of the investment is, immediately prior to the implementation of the investment, "controlled by a WTO investor".

Starting January 1, 2019, and for subsequent years, the threshold level will be adjusted annually based on growth in nominal GDP in accordance with the formula set out in subsection 14.1(2) (i.e., the growth in nominal GDP at market prices multiplied by the threshold amount determined for the previous year.)

The manner of calculating the enterprise value of the Canadian business that is the subject of the investment is prescribed in sections 3.3, 3.4 and 3.5 of the Investment Canada Regulations depending, on whether the Canadian business is a publicly traded entity, non-publicly traded entity or acquired by the acquisition of assets, respectively.

Private sector trade agreement investments

Pursuant to subsections 14.11(1), (2) and (3) of the Act, starting September 21, 2017, the review threshold is $1.5 billion in enterprise value for investments to acquire control of a Canadian business by:

  1. trade agreement investors that are not state-owned enterprises; and
  2. by non-trade agreement investors that are not state-owned enterprises where the Canadian business that is the subject of the investment is, immediately prior to the implementation of the investment, “controlled by a trade agreement investor”.

As defined in subsection 14.11(6) of the Act and the accompanying schedule, trade agreement investors include entities and individuals whose country of ultimate control is party to one of the following trade agreements:

  • Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act
  • North American Free Trade Agreement
  • Canada-Chile Free Trade Agreement Implementation Act
  • Canada-Peru Free Trade Agreement Implementation Act
  • Canada-Columbia Free Trade Agreement Implementation Act
  • Canada-Panama Economic Growth and Prosperity Act
  • Canada-Honduras Economic Growth and Prosperity Act
  • Canada-Korea Economic Growth and Prosperity Act

Starting January 1, 2019, and for subsequent years, the threshold level will be adjusted annually based on growth in nominal GDP in accordance with the formula set out in subsection 14.11(3) (i.e., the growth in nominal GDP at market prices multiplied by the threshold amount determined for the previous year.)

The manner of calculating enterprise value of the Canadian business that is the subject of the investment is prescribed in sections 3.3, 3.4 and 3.5 of the Investment Canada Regulations depending on whether the Canadian business is a publicly traded entity or acquired by the acquisition of assets, respectively.

State-owned enterprise WTO investments

Pursuant to the subsections 14.1(1.1) and (2) of the Act, the review threshold for 2017 is $379 million in asset value for investments to directlyFootnote * acquire control of a Canadian business by:

  1. WTO investors that are state-owned enterprises; and
  2. non-WTO investors that are state-owned enterprises where the Canadian business that is the subject of the investment is, immediately prior to the implementation of the investment, "controlled by a WTO investor".

The official amount was published on page 664 of the Canada Gazette on February 11, 2017.

This threshold will be annually revised to reflect the change in Canada's nominal gross domestic product (GDP) in accordance with the formula set out in subsection 14.1(2) (i.e., the annual change in nominal GDP at market prices multiplied by the threshold amount determined for the previous year).

The manner of calculating the value of the Canadian business that is the subject of the investment is prescribed in section 3.1 of the Investment Canada Regulations and is based on the Canadian business' asset value as shown on the balance sheet of the Canadian business at the end of the last completed fiscal year before its proposed acquisition.

Non-WTO investments and investments in cultural business

Pursuant to subsections 14(3) and 14(4) of the Act, the thresholds for investments which are subject to review are 5 million dollars in asset value for direct investments and 50 million dollars in asset value for indirect transactions. These thresholds apply to investments by an investor who is not a "WTO investor", as defined in subsection 14(6) of the Act, which involve the acquisition of control of a Canadian business which is not "controlled by a WTO investor" immediately prior to the implementation of the investment.

These thresholds also apply to investments made by all non-Canadian investors to acquire control of a Canadian business that is a cultural business as described in section 14.1(6) of the Act. Notwithstanding the above, any investment which is usually only notifiable, including the establishment of a new Canadian business, and which falls within a specific business activity listed in Schedule IV of the Investment Canada Regulations (cultural heritage or national identity), may be reviewed if an Order-in-Council directing a review is made and a notice is sent to the investor within 21 days following the receipt of a certified complete notification.

The manner of calculating the value of the Canadian business that is the subject of the investment is prescribed in Section 3.1 of the Investment Canada Regulations and is based on the Canadian business' asset value as shown on the balance sheet of the Canadian business at the end of the last completed fiscal year before its proposed acquisition.

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