On August 2, 2022, amendments to the National Security Review of Investments Regulations will come into force, creating a voluntary filing mechanism for investors who do not currently have a filing obligation under the Investment Canada Act (the “Act”). These amendments will also extend the initial national security review period from 45 days to five years for all investments by non-Canadians who choose not to make a filing.

The federal government first proposed these amendments in the Canada Gazette on February 12, 2022. The amendments as posted in the Canadian Gazette on June 3, 2022 are unchanged from the February proposal, aside from the coming into force date.

Currently, non-Canadian investors are only required to make a filing for: (i) the establishment of a new Canadian business or an entity carrying on operations in Canada; or (ii) the acquisition of control of a Canadian business, including a part of a business capable of being carried on as a separate business. Non-Canadian investors are not required to make any filing for, among other things, the acquisition of part of a Canadian business that does not constitute an acquisition of control of that Canadian business under the Act (i.e., a minority interest in the Canadian business).

This has implications for non-Canadian investors seeking regulatory certainty (i.e., certainty that their investment will not be subject to government interference on the basis of national security concerns). For investments that do not require a filing, the 45 day review period commences when the Minister of Industry first becomes aware of an investment, which could be at any time, and as a practical matter, could be long after implementation. In such a situation, the absence of a precise date on which the 45 day review period commences creates significant uncertainty for non-Canadian investors.

The present amendments will benefit non-Canadian investors contemplating an investment in Canada by creating an option to make a voluntary filing, which will oblige the government to decide whether it will take any action within 45 days from the date on which the filing is certified as complete. Non-Canadian investors who choose to submit a voluntary filing will, within 45 days from the certification date of their filing, know whether the Government of Canada intends to examine the investment, thereby giving the investor regulatory certainty pre-implementation.

However, under the new amendments, if the non-Canadian investor chooses not to make a voluntary filing, the government would have up to five years after the date of implementation of the investment to decide whether it will take any action.

A more detailed outline of the amendments  and their impact can also be found in our previous bulletin, “Canada Proposes to Permit Voluntary Filings under National Security Provisions of its Investment Canada Act“.

If you have questions about the national security review process or Canadian foreign investment law more generally, please reach out to any member of Fasken’s National Security Group. Our group has significant experience advising clients on all aspects of national security law.

The information and guidance provided in this bulletin does not constitute legal advice and should not be relied on as such. If legal advice is required, please contact a member of Fasken’s National Security Group.