Archived — Annual Report 2013–14


In a competitive and globalized world, foreign investment is an important factor in Canada's economic success, leading to higher living standards through better paying jobs, new technologies and international trade. As such, Canada has a broad framework in place to promote trade and investments that are in its interests.

The Investment Canada Act (ICA or the Act) is the primary mechanism for reviewing foreign investment in Canada. Its purpose is twofold: to review significant foreign investments to determine if they are likely to be of net benefit to Canada and to review investments that could injure national security.

Under the Act, a foreign investor seeking to acquire control of a Canadian business with assets equal to or above the established threshold must apply for a review, which is an assessment of the investment's likely net benefit to Canada. In 2013, the threshold for investors from World Trade Organization (WTO) member countries was $344 million in asset value, and in 2014 it was $354 million. For investments where the value of the assets of the Canadian business falls below the established threshold, investors must file a notification.Footnote 2

As part of the review process, the Minister of Industry considers whether the proposed investment is likely to be of net benefit to Canada. To determine net benefit, the following six factors come into play: the investment's effect on the level and nature of economic activity in Canada, including employment, resource processing, and the utilization of parts, components and services; the degree and significance of participation by Canadians in the Canadian business; the investment's effect on productivity, industrial efficiency, technological development, and product innovation and variety; the investment's effect on competition; its compatibility with industrial, economic and cultural policies; and its contribution to Canada's ability to compete in world markets. The complete factors are clearly laid out in section 20 of the Act. Together they provide predictable guidance for investors while maintaining the flexibility required to protect Canada's interests.

Where the investor is owned, controlled or influenced by a foreign state, the Minister also considers the guidelines on investments by state-owned enterprises (SOE) as part of the review, taking into account the investor's adherence to free enterprise principles, the state's degree of influence over the investor and the likely commercial orientation of the Canadian business.

Summary of Activity in 2013–14

In 2013–14, the Minister of Industry approved 11 applications under the ICA and 655 notifications were filed.

The resource sector attracted the largest share of investment: a total of 97 investments involving companies with combined assets of $31.54 billion.

The United States again led in terms of the amount of investment: 350 investments, representing just over half of the total number of investments, worth over $18 billion. The European Union was second with 194 investments totalling nearly $6 billion in asset value.

Policy Developments

In response to globalization and a changing investment environment, the Government has taken steps in recent years to keep the investment review framework up to date. These included releasing SOE guidelines in 2007, introducing amendments for national security reviews in 2009, ushering in changes to increase transparency while continuing to protect confidentiality in 2009 and 2012, and clarifying its approach to SOE investments and updating the SOE guidelines in 2012.

To implement the measures announced in December 2012, amendments to the ICA were introduced in Economic Action Plan 2013 Act, No. 1, which received Royal Assent on .

The amendments include the following:

  • introducing a definition for "state-owned enterprise";
  • creating a distinct net benefit threshold for private sector WTO investors based on enterprise value while maintaining the asset value based threshold for SOE investors;
  • permitting the extension of timelines for national security reviews; and
  • permitting the Minister of Industry to determine or declare that an entity is controlled in fact by an SOE.

Regulations are required to bring into force the extension of timelines for national security reviews and the new enterprise value threshold for private enterprises.

There were no other policy or legislative developments in 2013–14.


In general, the 2013–14 fiscal year saw significant activity under the Act, particularly notifications, which tripled in value from the previous year. The four largest notifications totalled approximately $21 billion in assets. On the other hand, the total number of applications under the Act and the related asset values were down from the previous year, reflecting the variability of investment activity from year to year.

The Government of Canada continues to encourage investment that benefits Canada. Therefore, after rigorous review, the majority of investment proposals are approved.


Footnote 2

The WTO asset value review threshold is adjusted annually to reflect the change in nominal gross domestic product in the previous year. In 2013, the Government of Canada introduced amendments to the ICA to raise the threshold for review to $1 billion and to make enterprise value the basis of the threshold, with the exception of its application to state-owned enterprises. However, at the time of publication of this report, these changes were not yet in effect. The Government also announced a further increase to $1.5 billion for European Union investors as part of the Canada–European Union Comprehensive Economic and Trade Agreement. The threshold for non-WTO investors is $5 million for direct and $50 million for indirect acquisitions (asset value). Indirect investments by WTO investors are not subject to review, but the investor must file a notification. An indirect acquisition is an acquisition of a foreign company that has Canadian subsidiaries. Also, in cases where a foreign investor starts a new business, the investor must file a notification.

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