Overview of the Investment Canada Act
The Investment Canada Act (ICA) applies to all investments in Canada by non-Canadians. The purpose of the ICA is "to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada and to provide for the review of investments in Canada by non-Canadians that could be injurious to national security."
The administration and enforcement of the ICA by the Government of Canada is closely intertwined with domestic and international political considerations and concerns about Canada's economic security. With Canada facing unprecedented trade and tariff tensions, the ICA is an important component of the government's toolkit in fostering investment in Canada while simultaneously safeguarding Canadian interests, with important implications for Canadian businesses and foreign investors seeking to invest in Canada.
A foreign investor acquiring control of a Canadian business or establishing a new Canadian business is required to submit a filing. For most investments, the non-Canadian investor is only required to submit a simple notification form. The notification must be submitted to the Director of Investments under the ICA, either before or up to 30 days after the investment has been implemented.
Where the relevant financial threshold is met, an investment is subject to a suspensory pre-closing review to determine whether it is likely to be of "net benefit" to Canada.
For 2025, the relevant thresholds for a pre-closing review of a direct acquisition of control of a Canadian business are as follows:
- Trade Agreement Investors: A C$2.079-billion enterprise value of the Canadian business for investments by investors from the following countries with which Canada has a free trade agreement: United States, United Kingdom, European Union member countries, Australia, Brunei, Chile, Colombia, Honduras, Japan, Malaysia, Mexico, New Zealand, Panama, Peru, Singapore, South Korea and Vietnam
- World Trade Organization (WTO) Investors: A C$1.386-billion enterprise value of the Canadian business for investments by investors from WTO member countries
- State-Owned Enterprises: A C$551-million asset value of the Canadian business for investments by state-owned enterprises from WTO member countries
In addition, the ICA includes special rules and significantly lower thresholds of C$5-million or C$50- million in asset value for investments in cultural businesses (for example, video game developers, bookstores or book publishers, and film or movie production companies).
National Security Review Under the ICA
In addition to the mandatory filing obligation for certain foreign investments, all investments in a Canadian business by non-Canadians may be subject to a national security review.
Recently, the focus of the ICA has been evolving, shifting from the pre-closing review of investments to determine whether they are of net benefit to Canada, to the review of investments for their potential to be injurious to Canada's national security. While fewer than 10 investments have been subject to a net benefit review in each of the past five years, the number of investments subject to extended national security screening and review has continued to increase from 10 investments in the government's 2019–2020 fiscal year to more than 20 in each of the past five fiscal years, with a high of 32 in 2022–2023.
Alongside this shift to a national security focus, several recent changes significantly alter the national security review regime under the ICA by broadening the filing regime, introducing new factors to be considered in a national security review, and updating the process for administration and enforcement of the ICA's national security provisions.
Broadening the Filing Regime
Two important developments have broadened the filing regime under the ICA.
First, in 2022, a voluntary filing regime was introduced, enabling investors to notify the Canadian government of minority investments or investments in entities with assets in Canada that are not subject to a mandatory filing obligation. If a voluntary filing is not submitted, the government has five years from the date the investment is implemented to commence a national security review, instead of 45 days when a filing is made.
Second, recent amendments to the ICA will introduce a new mandatory pre-closing filing requirement for investments in sensitive sectors. These amendments received royal assent on March 22, 2024. Once in force, there will be a mandatory and suspensory pre-closing filing obligation for all investments in certain prescribed sectors, including minority investments, where certain other criteria are met (for example, where the investor could have access to or direct the use of material non-public technical information and have the power to appoint or nominate a member of the board or senior management). Investments subject to this new mandatory filing requirement will be subject to a minimum 45-day waiting period. The prescribed business sectors have not yet been defined but are likely to include the sectors identified in the Guidelines on the National Security Review of Investments (Guidelines).
Once implemented, this new filing regime will have important implications for deal timing, regulatory risk allocation and strategy for investments by non-Canadian investors in these sectors, regardless of nationality and whether the investment is an acquisition of control or a minority investment. Transactions not completed before the amendments come into force and not already notified under the ICA will be subject to the new filing obligations. This new pre-closing filing obligation is expected to come into effect in 2026, as the government first needs to introduce enabling regulations identifying the prescribed business sectors to which it will apply.
Revised National Security Review Guidelines
As discussed in our March 6, 2025, Blakes Bulletin: Canada Revises its National Security Review Guidelines for Investments, the Canadian government has recently revised the Guidelines, which inform investors of the procedures that will be followed by the government in administering the national security review process under the ICA. The revised Guidelines reflect two critical changes to the government's approach to national security reviews:
- New National Security Review Factor: A new "economic security" factor has been introduced, allowing the Minister of Industry (Minister) to consider "the potential of the investment to undermine Canada's economic security through the enhanced integration of the Canadian business with the economy, or any sector of it, of a foreign state." The government's announcement introducing the new Guidelines indicates that "the size of the Canadian business, its place in the innovation ecosystem, and the impact on Canadian supply chains" will be considered in assessing this factor. This new "economic security" factor expands the scope of national security reviews to capture economic factors that have more typically been considered under the ICA's "net benefit" review process for larger transactions exceeding certain monetary thresholds.
- Sensitive Technology List: On February 6, 2025, the Canadian government published its Sensitive Technology List, which identifies 11 technology areas that are considered to be sensitive and that are considered key areas with national security implications. The revised Guidelines incorporate the Sensitive Technology List, which replaces Annex A, which had previously set forth a non-exhaustive list of technology areas that may be considered sensitive for the purposes of a national security review.
In addition to sensitive technologies, the Guidelines identify numerous factors that may be taken into account in assessing the national security implications of foreign investments, including impacts on the supply of critical goods and services to Canadians or the supply of goods and services to the Government of Canada, and identify numerous sectors where national security concerns may be heightened, including critical minerals, critical infrastructure, defence and personal data. A list of sectors identified in the Guidelines is set out on the next page.
Sectors Identified in the Guidelines on the National Security Review of Investments
- Sensitive technologies, in the 11 technology areas identified
in Canada's Sensitive Technology List:
- Advanced Digital Infrastructure Technology
- Advanced Energy Technology
- Advanced Materials and Manufacturing
- Advanced Sensing and Surveillance
- Advanced Weapons
- Aerospace, Space and Satellite Technology
- Artificial Intelligence and Big Data Technology
- Human-Machine Integration ⸰ Life Science Technology
- Quantum Science and Technology
- Robotics and Autonomous Systems
- Critical infrastructure, in the 10 critical infrastructure
sectors identified in the National Strategy for Critical Infrastructure:
- Energy and utilities
- Finance
- Food
- Transportation
- Government
- Information and communication technology
- Health
- Water
- Safety
- Manufacturing
- Critical minerals (see the government's Critical Minerals List)
- Defence
- Personal data (including personally identifiable health, genetic, biometric, financial or other personal data)
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