The primary focus of Canada’s review of foreign investments has shifted from an assessment of an investment’s economic benefits in Canada to an assessment of national security risks. The range of potential national security concerns has broadened beyond traditional areas such as national defense, terrorism, and organized crime, to include the potential use of artificial intelligence, advanced technologies, critical supply chains or sensitive personal data to harm Canada’s security. Procedurally, most national security reviews are initiated following a non-Canadian investor submitting the standard notification required to be filed after acquisition of control of a Canadian business, and extending this process to minority investments could reduce the uncertainty that currently applies to such transactions.

By Neil Campbell & Joshua Chad1

I. INTRODUCTION

Canada has been reviewing foreign investments for half a century, but its focus over the past decade has shifted from an economic assessment of benefits to Canada towards national security issues. The range of potential national security concerns continues to expand, but an improved process is needed for the potential review of non-notifiable transactions.

 

II. CANADA’S FOREIGN INVESTMENT REVIEW REGIME

Canada’s primary legislation regulating foreign investment is the Investment Canada Act (“ICA”).2 It sets out notification and review/approval requirements governing investments by non-Canadians t

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