On September 28, 2023, the House of Commons Standing Committee on Industry and Technology (“INDU”) – the committee tasked with studying the legislation and activities of Innovation, Science and Economic Development Canada – concluded its study of Bill C-34: An Act to amend the Investment Canada Act and reported its proposed amendments to the House of Commons.

First reading

By way of background, Bill C-34 was introduced in the House of Commons by the Minister of Innovation, Science and Industry (the “Minister”) on December 7, 2022. As Fasken’s Competition, Marketing & Foreign Investment group highlighted at the time, the amendments contained in the bill, which is expected to be enacted by 2024, would represent the most significant legislative changes to the Investment Canada Act (the “ICA”) since national security provisions were introduced in 2009.

Some of the notable amendments unveiled at first reading include:

  • The creation of a suspensory pre-implementation filing requirement and waiting period for investments in certain sensitive sectors.
  • The creation of a new authority for the Minister to initiate national security reviews, accept undertakings to mitigate national security risk (currently, the authority for each of the foregoing rests with the Cabinet), and impose provisional conditions on an investment during a national security review.
  • Stiffer penalties for non-compliance with the ICA.

Amendments proposed by INDU

INDU has now come back to the House of Commons with a proposed revised version of Bill C-34, which now also includes the following proposed amendments:

Otherwise non-reviewable investments

  • Lengthening the period during which the Governor in Council (the “GIC”) may issue an order for the review of an otherwise not reviewable investment in a Canadian cultural business from 21 days to 45 days.
  • Authorizing the GIC to issue an order for the review of an otherwise not reviewable investment when the investor is a non-Canadian state-owned enterprise or is controlled by a non-Canadian state-owned enterprise unless the investor is a trade agreement investor (similarly, this review could be issued within 45 days).

Net benefit review factors

  • When considering whether an investment is of net benefit to Canada, requiring the Minister to take into account (i) the effect of the investment on any rights relating to intellectual property whose development has been funded, in whole or in part, by the Government of Canada, and (ii) the effect of the investment on the use and protection of personal information relating to Canadians.

National Security

  • Extending the application of the national security provisions of the Act to acquisitions of any of the assets of a Canadian business by a non-Canadian state-owned enterprise.
  • Clarifying that the national security provisions of the Act apply to an investment by a non-Canadian to acquire the assets of an entity operating in Canada, even when the acquisition does not bring about a change of control. This may be intended to address security risks connected with certain foreign investors acquiring the intellectual property of entities operating in Canada but has potentially much broader application than just intellectual property transfers.
  • Authorizing the Minister to conclude that an investment by a non-Canadian could be injurious to national security from the fact that the non-Canadian has previously been convicted, within or outside Canada, of an offence involving an act of corruption.
  • Requiring the Minister to inform the National Security and Intelligence Committee of Parliamentarians and the National Security and Intelligence Review Agency within 30 days of issuing a decision with respect to a national security review of the fact that a notice or order was issued and the identity of the entities involved.

Privileged Information

  • Authorizing (though not requiring) the Minister to disclose publicly the identity of the non-Canadian investor (and Canadian business) that is the subject of an order made in connection with a national security review

Next steps

Bill C-34 has been steadily progressing through the legislative process. Now that the bill has reached the report stage in the House of Commons, the next hurdle is third reading in the House of Commons where the bill will be debated and voted on. If the bill passes third reading in the House, it will advance to the Senate for further study.

Fasken’s Competition, Marketing & Foreign Investment team will continue to closely monitor every step of the bill’s progress. Stay tuned for further updates, and feel free to reach out directly to a member of Fasken’s Competition, Marketing & Foreign Investment team with any specific questions.

The information and guidance provided in this blog post do not constitute legal advice and should not be relied on as such.