Canada Tables New Bill to Reform Investment Canada Act

December 20, 2022

On 7 December 2022, Canada announced the tabling of Bill C-34, An Act to amend the Investment Canada Act, also known as the National Security Review of Investments Modernization Act. These reforms are the largest updates to the Investment Canada Act (ICA) since the introduction of the national security review process in 2009. Bill C-34 is currently at first reading and may undergo minor or substantive amendments as it proceeds through the House of Commons and the Senate.

The seven main proposed amendments are detailed in a backgrounder, published by the Department of Innovation, Science and Economic Development Canada, and summarized below.

1. New Pre-implementation Filing Requirements

Under the current ICA, foreign investors acquiring control of a Canadian business not subject to the Ministerial review or approval process may file a notification of their investment before completing their investment or within 30 days of completing their investment. Bill C-34 amends this process to require foreign investors to file a pre-implementation filing notification if the following three conditions are met:

  1. The acquired Canadian business carries on a “prescribed business activity”;
  2. The foreign investor could, as a result of the investment, have access to, or direct the use of, “material non-public technical information” or “material assets”; and
  3. The foreign investor would have, as a result of the investment, the power to appoint or nominate a person to a position that has the capacity to direct the business and affairs of the entity (e.g., board of directors, senior management position, or a trustee).


The terms “prescribed business activity”, “material non-public technical information”, and “material assets” are not defined in Bill C-34 and will be given meaning through subsequent government regulations. It is expected that “prescribed business activity” will likely cover areas of technology or intellectual property that the Canadian government considers may give rise to national security concerns.

The new mandatory pre-implementation filing requirements are meant to ensure that the Government of Canada is kept appraised of relevant investments and has enough time to make relevant decisions on national security grounds, before sensitive information or assets can be shared with investors upon implementation of the investment.

2. New Ministerial Authority

Bill C-34’s amendments give the Minister authority to (a) extend the national security review of investments, (b) impose conditions during a national security review, and (c) accept undertakings to mitigate national security risk as a condition of allowing a foreign investment to proceed.

Overall, these amendments are meant to improve the efficacy of the ICA by removing the mandatory recourse to the Governor-in-Council for certain decisions, and otherwise improving the ability of the Minister to respond to individual investments through conditions and undertakings.

     a. Authority for the Minister to extend the national security review of investments

Currently, in order for the Minister to extend the time period to conduct a national security review beyond 90 days, an Order from the Governor-in-Council is required. The proposed Bill C-34 amendments give the Minister of Innovation, Science and Industry, after consultation with the Minister of Public Safety and Emergency Preparedness, the power to extend the review without requiring action from the Governor-in-Council.

     b. Authority for the Minister to impose conditions during a national security review

Bill C-34 will also give the Minister of Innovation, Science and Industry, after consultation with the Minister of Public Safety, the power to impose and amend interim conditions on a foreign investor’s investment in Canada during the national security review if the Minister determines such conditions are necessary to prevent injury to national security. If the investment is allowed following national security review, those conditions may become part of a permanent undertaking or condition, or removed if appropriate.

     c. Authority for the Minister to accept undertakings to mitigate national security risk

Finally, Bill C-34 also gives the Minister of Innovation, Science and Industry the authority to accept binding undertakings by a foreign investor to reduce the potential national security injury  that would result from the investment, without prior approval by the Governor-in-Council through an Order.

3. Stronger Penalties for Non-compliance

Current penalties for non-compliance with the ICA may not exceed $10,000 each day of non-compliance. Bill C-34 increases that amount to $25,000 per day of non-compliance and gives the Minister the discretionary power to fine a foreign investor $500,000 for failing to make the mandatory pre-implementation filing. The amendments also include the possibility to update these penalties in regulations, as opposed to a legislative amendment.

4. Improved Information Sharing with International Counterparts

Bill C-34 establishes new mechanisms to permit the Minister of Innovation, Science and Industry to disclose information with respect to an investor to Canada’s international allies for the purpose of facilitating national security reviews, thereby removing restrictions on sharing information on investors, which was previously considered privileged and exempt from disclosure.

5. New Rules for Protecting Information during a Judicial Review

Bill C-34 introduces new provisions on closed material proceedings in the context of judicial review proceedings of national security review decisions. These amendments will ensure that confidential or sensitive information may be used and reviewed by the courts in the context of these proceedings, while protecting it from disclosure to the public.

Our team will continue to monitor the reforms to Canada’s foreign investment regime, providing updates to keep clients informed about important and relevant developments.


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